Quote - I'll have to check the gamma settings when I look at it again. Good to know about that.

The general consensus was that normal maps were inferior than displacement maps. Is that still the case?

No, normal maps and displacement maps do different things. Normal maps modify the normal (as the name says) and do not displace anything. You can apply both at the same time, usually with bad results unless you created them specifically for this kind of usage. If zbrush can export them both, they are most likely not to be used together (i actually do not have zbrush but 3dcoat, which is probably the same). Personally i do not believe that they are inferior and even less that there will be any general consensus about it :-)

Quote - My understanding is normal maps "displace" x/y/z, while displacement maps only displace "in/out".

Normal maps only modify the normal of an object and are applied to the material (shader) of an object, while displacement maps modify (displace) the geometry of a surface. They are applied to the material, too, but only because there is no other place to put them. They are more similar to a morph than to a texture actually. Displacement maps only do the "in/out".

Because it is most often the normal which affects the interaction of a material with light, use normal maps to modify the look of a material. When you need to modify the geometry, e.g. to get self shadowing or a different outline, use displacement maps. Or use displacement maps for close-ups and normal maps elsewhere.