Problem: Display Route Events does not use the definition query for a layer
When drawing route events in ArcMap, either with Display Route Events, or with Tools > Add Route Events, all events will be drawn regardless of a definition created on the route layer.
This is a known limitation.
Solution or Workaround
There is no solution available through the ArcMap GUI.
If you are adding route layers through code, you can limit the number of routes events that get displayed by specifying a RouteWhereClause when creating a RouteLocator object.
For more info on adding layers programmatically, refer to the Dynamic Segmentation samples on the ArcObjects site. Click the link below and expand Samples > Dynamic Segmentation.