How can I use the "Taxonomy display" view on the Panels taxonomy override page?
In this case, you don't need to adjust the module weight-- you need to remove the override on the taxonomy term pages.

Are you already overriding the taxonomy term display in Views?  If so, just disable that view and the error should go away.

EDIT: If you still want to use the taxonomy view in Panels, you should edit the view as follows (I do this on one of my sites):


Open the edit screen for the Taxonomy display view.
Click page.
Where it says clone page, click the triangle and select disable page.
Click Add.
Choose Content pane.
Add the content pane.
Click Argument input.
For the first argument, choose From panel argument and First.
For the second argument, choose From panel argument and First. (identical to the settings for the first)
Go to your panel and add this content pane instead of the page (it will appear under View panes).


Why do you have to do this?  Because otherwise Views and Panels will fight each other over who controls the page.  By using a content pane, you avoid assigning a URL path in Views, allowing Panels to override the path successfully.