Magnificent display seen by sweetheart at two, in ancient city (7)
I believe the answer is:
pompeii
'ancient city' is the definition.
(ancient Roman city)
'magnificent display seen by sweetheart at two' is the wordplay.
'magnificent display' becomes 'pomp' (I've seen this in another clue).
'seen by' says to put letters next to each other.
'sweetheart' becomes 'e' (the heart/centre of 'sweet').
'at' means one lot of letters go next to another.
'two' becomes 'II' (Roman numerals).
'pomp'+'e'+'ii'='POMPEII'
'in' acts as a link.
(Other definitions for pompeii that I've seen before include "Italian town near Naples buried by Vesuvius in AD 79" , "Roman town buried by Vesuvius" , "Italian city, buried by volcanic ash 79 AD" , "Ruined Roman town" , "Ancient Italian city" .)