If you transform a node with a displacement effect it will break. I have included a sample app. It scrolls an image which is wrapped inside of a group with a displacement effect. If you press the 'equation' button it will cycle through several displacement effect equations. Everything works as expected.

If you then press the 'rotate 30' button this will set the rotation of the group to 30 degrees. Now the effect on screen will break into pieces instead of simply being rotated. If you then press the 'rotate 0' button this will set the rotation back to 0 degrees. However, the scene remains broken.

It appears that something strange and permanent happens to displacement effected nodes when you transform them.