Hey Tim --
You should take your skeleton and bind the clothes on top of it. Take whatever geometry you are using and put that in a different render layer, and set the original geometry to have a black alpha. I'm not in front of Maya right now, but that's what you're looking for in the render view -- a black hole where your object was. It's not setting the transparency on a solid shader, it's setting the matte opacity, I think. If you can't get that to happen, you can include the old geometry. Since you have the reference file, you should be fine adding in the new geometry. A displacement map is a cool idea, but for anything complex, you'd rather have real geometry, unless you're an amazing texturer who hates to rig things up...
It's far easier to just change the character's clothing by re-coloring it, if that's an option for you.
-Mary