I would say yes as long as it looks good. Your sister is still going to be the one to pull the tags off of it.
Quite honestly it wouldn't bother me a bit. It's still a new gorgeous
coach.
I'm not trying to ruffle any feathers around here I know that there are a lot of people here who are really particular about their bag, maybe it's because I'm a little older I don't know, nonetheless here's my take:
Don't get me wrong I baby my expensive leather bags. I make sure that I don't sit it on the floor or the table or anywhere else that I know it could get something on it, but on the other side of this coin is the fact that it is a quality product. I have to believe that when Coach designs their bags they design them to be used and to age gracefully, with good care.
I treat all of my things in the same way (coats, bags, clothes, etc.) whether it was a bargain or a treat, but it was meant to be used, there is no way for it to stay brand new forever, it can certainly look brand new with proper care.
So, to me, I just don't understand why a display model would turn someone off unless there is something wrong with it. I'm certain you can get it in a box with a ribbon and your sister isn't going to give a darn about whether it was a display model that people touched or not.
Just my two cents, don't shoot me!