Drop an element based on the value of an attribute but retain children

This XSL stylesheet, which can be applied to your content on export to XML,

<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:xs="http://www.w3.org/2001/XMLSchema"
    exclude-result-prefixes="xs"
    version="3.0">
    
    <xsl:output indent="1"/>
    
    <xsl:template match="feedisplay[@display='false']">
        <xsl:apply-templates select="*"/>
    </xsl:template>    
    
    <xsl:mode on-no-match="shallow-copy"/>
    
</xsl:stylesheet>

will give you this output:

<?xml version="1.0" encoding="UTF-8"?>
<option1>
   <feedisplay display="true">Text in the output</feedisplay>
   <option2>
      <feedisplay display="true">Text in the output</feedisplay>
      <option3>
         <option4>
            <feedisplay display="true">Text in the output</feedisplay>
         </option4>
      </option3>
   </option2>
</option1>

Would this be your sample input with the nesting in place?

<?xml version="1.0" encoding="UTF-8"?>
<option1>
    <feedisplay display="true">Text in the output</feedisplay>
    <option2>
        <feedisplay display="true">Text in the output</feedisplay>
        <option3>
            <feedisplay display="false">Text I want ignored/omitted in the output</feedisplay>
            <option4>
                <feedisplay display="true">Text in the output</feedisplay>
            </option4>
        </option3>
    </option2>
</option1>

Do you want to omit it from FrameMaker on import from XML? Or do you want to see it in FrameMaker but omit it when you save as XML?

Either way, can you post an after sample of your XML? Thanks.