The problem is that the memberaction_dropdown is created before the forumbit_display hook is called (sorry, I should have realized that yesterday). I think you can use the memberaction_dropdown hook, I'm trying to work that out now.
Edit: OK, this seems to work (using hook memberaction_dropdown):
Code:
$lastpostuserid = $memberinfo['userid'];
/*write custom query here to get display name*/
global $db;
$lastposter = $db->query_first("SELECT field6 FROM " . TABLE_PREFIX . "userfield WHERE userid = '$lastpostuserid'");
$lastposterhome_var = $lastposter['field6'];
/* register variable in the 'memberaction_dropdown' template */
vB_Template::preRegister('memberaction_dropdown',array('lastposterhome_var'=> $lastposterhome_var));