Is a display-name obliquely endorsing violence allowed on Stack Exchange sites?
The word "allowed" is not accurate, since there isn't a rule against such cases. It's more a question of "If I'll ask the site moderators or Stack Exchange staff to reset the name, will they do it?".
And the answer to that is: we can't know. It's case-by-case, and each mod/staff member might have different response based on personal beliefs/ideas/opinions.
If you feel offended by anything you see on Stack Exchange, be it post, comment, or display name, you have the right to flag and report (assuming you have the rep, of course). In case of display name, the way is to flag a post or a comment by that user with custom flag and explain why you think the name should be reset. In case the user has no posts or comments, there's not really a point to flag - the only way to see the name is when looking in the users page. Personally I don't think you should do anything in such case.
When flagging, keep in mind the flag might be declined. In such case, please do not flag again, that would already be waste of the moderators time. If the flag is pending after long time (few days, not just a single day), try nudging a mod in chat, or flag other post - but that's the limit. If even that second flag is not handled, and the display name is not outright offensive (e.g. "Kill All The Bad Guys of America") better let it go.