Final answer:
Criterion 1 for demonstrating character displacement involves a significant morphological difference related to resource partitioning in sympatric species, in comparison to allopatric populations.
Step-by-step explanation:
The first criterion for demonstrating character displacement, as outlined by Schluter & McPhail in 1992, is the establishment of a significant morphological difference between sympatric species (those living in the same geographical area) that is structurally correlated with a resource partitioning, in comparison to when these species are allopatric (living in separate geographical areas).
This means that for character displacement to be considered, there should be a notable difference in some physical trait of two species that coexist in the same area, which can be directly related to how they utilize different resources within their shared habitat. This differentiation is less pronounced or non-existent when the species do not share an overlapping range.