When an assembly simplified rep uses a preexisting user defined rep of a lower assembly/part, the hidden associativity with the model tree no longer exists. According to R&D this is a known limitation. For example (see attached parts).
top_assy_simprep.asm has a simplified rep called TEST. This simplified rep calls out a user defined rep for a part within a subassembly of this assembly. The cutout just disappears. Once this rep is active, there is a disconnect between the geometry window and the model tree. Hiding the components in the model tree does not hide the items in the geometry window and visa verse. The problem with this is if you hide the part in the geometry window, there is no easy way to unhide it in the simplified rep! The Model Tree shows it unhidden, but you can't seem to get it back! Yes, I can do VIEW>VISIBILITY>UNHIDE ALL, but I may not want everything unhidden - just that one item.
The original PTC Case for this is 11879876. This seems like a HUGE oversight.