This article explains how the Katana color picker option, 'Enable Display Transform', works.
In OCIO you can enable a color picker display transform to use for gamma corrections of the color picker thumbnail similar to the Monitor, when converting from linear to your Monitor's colorspace. This is what Katana uses when the 'Enable Display Transform' option is checked.
The color transformation should be specified under the OCIO configuration file roles section, and you can find more information regarding this on the following OpenColorIO page as: http://opencolorio.org/usergui
color_picking - Colors in a color-selection UI can be displayed in this space, while selecting colors in a different working space (e.g scene_linear or texture_paint)
Depending on whether you are using Katana's default OCIO configuration or a custom one, when looking into the configuration file you should see the specific color transform applied to your color picker.
For example, Katana's default OCIO configuration is nuke-default and the color picker display transform is set as sRGB. This information can be found in Katana's installation directory under: $KATANA_HOME/etc/ocio/nuke-def
Color transformation logic
Within Katana, with display transform (filmlook) enabled, the raw screen color values provided by the color picker are passed through the processor and returned by the following Python statement:
NOTE: The color picker is working under the assumption that you want to adopt the values that produce the picked screen color when piped through the display transform (if enabled): i.e. that the color preview matches the screen color whether or not the display transform is enabled.