Sounds like the problem was over-reliance on reducing the character's hit points by way of attack rolls, rather than the doesn't-actually-apply-against-everything benefit of blur and plate armor.For the rest of the campaign, he never got hit. It was literally game-breaking.
Cloak of Displacement essentially does this already. For some reason WotC rated it as not very powerful (only a Rare) but the only possible justification I can think of for that is that there are plenty of powerful monsters such as demons with Truesight and dragons (who have Blindsight) who outright ignore Cloaks of Displacement and Blur spells, at least at close range.
It's still extremely powerful in my opinion, especially if your AC was already high.
In short, the value of the item depends on how common high-level monsters are in the campaign. In the extreme case where every single monster has infinite-range blindsight or truesight and/or regular blindsight/truesight but no ranged attacks, the value of the item is zero.
From the description of the item and those abilites it is however pretty Clear that true sight will let you ignore the displacement, since it's an illusion. We don't know exactly what blindsight does so that's up to the DM, bu if it Works against Blur it should work against displacement too, IMO.Cloak of Displacement does not equal Blur. The description of the item does not mention Blur nor does it confer immunity from the effect to those with Blindsight or True Sight.
From the description of the item and those abilites it is however pretty Clear that true sight will let you ignore the displacement, since it's an illusion. We don't know exactly what blindsight does so that's up to the DM, bu if it Works against Blur it should work against displacement too, IMO.