You want to remove it for users that are in registered member or users can't set registered member as displayed group?
For users can't set reg members as displayed group...
Because i used Group Memberships(feature mybb) and i put user "Test" in another Group. He can to change display as a group in Registred Members....
Edit template
usercp_usergroups_memberof_usergroup_setdisplay
<if $usergroup['gid'] <> 2 then>
(<a href="usercp.php?action=usergroups&displaygroup={$usergroup['gid']}&my_post_key={$mybb->post_code}">{$lang->set_as_display_group}</a>)
</if>