Melissa Q at ESRI's Technical Support was most helpful in solving incident #919482 - Here was the solution she presented to me and it worked out perfectly. Her response is presented below:
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You mentioned that what you " would like to do is to create new point features from the dispersed marker representations in my point feature class which inherits the geometry of the marker locations" after using the Disperse Markers Tool. Please see the steps below that will enable you to do this.
1. So that the original data is not modified, please make a copy of it to work with.
2. Right click on the layer (copy) from within the arcmap table of contents and select "Convert Symbology to Representation".
3. In the Convert Symbology to Representation dialog box select "Change the geometry of the supporting feature" under "Behavior When Representation Geometry is Edited".
4. Select the convert button.
Now you can use the Disperse Marker tool and you will see the original symbology of the copied layer change to match the changes that were made to the representation using the Disperse tool. As a result you have a new point feature class that inherits the geometry of the marker locations. You can now test the identify capabilities in the arcGIS Server map service. I tested the identify in arcmap and it worked as expected.
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