I'm using PlaceAtMe to temporarily place display items via script, but i do not want the player to be able to pick up any of the placed items.

BlockActivation prevents the player from picking up the placed object, but it stills says "take whatever item" when moused over.

i put SetDestroyed on the placed reference and it removes the text when mousing over, but now i'm wondering what consequences are there in setting the destroyed flag on an item? does skyrim even recognize destruction level?

i'm only concerned with visual appearance, since the temporary display item is only for show. AFAIK, none of the useable items (weapons, armor, misc objects) have any destruction data anyway

I don't think so, assuming the command hasn't changed since Oblivion (where it was merely used to prevent a reference from being activated by the player).