Use (Don't display in "New Writeups") to avoid flooding the "New Writeups" nodelet if you're rapidly posting a lot of related material. The canonical example would be when the Jargon File was autonoded into E2. This is good and proper.
Don't use (Don't display in "New Writeups") to sneak something vile or abusive in below the radar of the editors and "gods". This sets our spider senses tingling. I can't speak for anyone else, but when I notice something inappropriate which came in marked with "Don't display..." I have a powerful urge to audit the noder's entire node list. While gently tapping the Node Killing Axe against my palm...