Solidworks 2010, first build
So I've searched for this problem, and some results dating back a few years have emerged. Here is what I am assuming was true then and probably still true now.
I would like to be able to change the display state for a particular component and have it reflect what is shown in a higher assembly. At the most basic level, displaying planes or hiding them when not needed. I can properly configure the component with multiple display states, and when I insert it into the assembly I can even navigate to the properties tab and find the multiple display states listed. Unfortunately, when I toggle between them (as it appears that I can) the visual inside the upper assembly is not updated. The component shows the desired display stay in ( ), but the features (in this case planes) are still visible.
As others have recommended, I can use configurations and simply link the two display states I desire to two physically identical configurations and it will migrate up to the assembly. Since the only way I found to toggle between configurations is in the properties menu, and directly next to this option is the choice to toggle between display state in EACH configuration, it seems that the thought is there for this feature to work.
Can someone please comment if there is something I am missing, or is the component configuration the only current way to change what appears to be display in an assembly.