I don't think normal maps actually do displace geometry. They more or less just trick the normal calculations into thinking there's more normals than there actually are and alters the directions they're "facing" accordingly to create the illusion of volume. 

Any time I've seen a normal map applied to a "low" poly mesh, you can still see the edges and faceting of the base mesh, grant it, its usually pretty well disguised because of the way the normal map breaks up the values on the surface, but it doesn't alter the silhouette at all to my knowledge. Normal Maps as I know them are mostly just like juiced bump maps and as such and in conjunction with bump maps, can lead to some incredible levels of detail with relatively low polygon counts.

Displacement maps however, in LightWave's incarnation anyway, will actually alter the geometry, however, how good that looks in the render depends on how much geometry is present to be altered, and as such can lead to the need for astonomical amounts of polygons.

Swishy, you are correct about still needing to take into account the flow on the base mesh. I've seen workflows both where people will model the base mesh, sculpt that, generate the normals, and apply them back to the base mesh as is if its sound enough to begin with, and also where people will model the base mesh, sculpt that, generate the normals, then create a new base mesh over top of the high res model to make sure they have the right poly flow and silhlouette then apply the normal map[s] to the new mesh. 

As I see it, you wouldn't use the normals to create the cave, I think that would need to be modeled with actual geometry, but instead use the normal maps to make some awesome looking cracks and gnarly textures on the cave's walls.

It shouldn't be too long before the technology filters its way down to you. Normal maps are getting to be pretty mainstream now it seems, as well as sculpting brushes. In one of the more recent releases of Blender they've included sculpting capabilities which I played with for a bit and it looked like it promising, I'm not sure what the level of support is for normal maps in Blender at the moment tho, didn't get that far. As it was for me to get a working setup to create and use normal maps in LightWave I had to seek out a couple free third party plugins all of which were a year or two or better old, so I don't think the tech is that far off from the "low" end.

Here's a quick normal map test I did about two or three weeks ago when I was getting for me to create/work with normal maps up and running. I did it mostly to test the limits of how far you can push normal maps, and also because I'd never used them, just seen them used, and crashed LW anytime I did try to use them. 

The box on the left is the "high" poly [not that I'd consider it high, more of a moderate at 9500 polys],  I used it to generate the normal map [object space] for the middle box, which is 26 polygons. Then cut the high poly box up and used it create a bump map for the far right box, which again is only 26 polygons.

You can see both the normal map and the bump map break down, and you can tell that its an image affecting a flat plane when you get off to the side a bit. I pushed this test well beyond the limits of what you would use normals maps for and used them to simulate a lot more volume than they should.

The middle row is just the boxes with the maps applied to the color channel rather than the appropriate channel and the bottom row is both maps, greatly compressed as they're both 2048². I've not taken the time to compare an object space normal map to a tangent space normal map, but I don't think the results will vary that much. Perhaps that'll be somethign to look at tomorrow. 

Geometry will typically, but not always, look the best but at the price of having that many more polys in the scene and the associated render hit. Comes down to finding a balance of what needs modeled, what can be normal mapped, and what can be bump mapped, at least that's how I see it.

Core i7 950@3.02GHz | 12GB Corsair Dominator Ram@1600mHz | 2GB Geforce GTX 660

Lightwave | Blender | Marmoset | GIMP | Krita