Dupli object is displayed on different layer

I am modeling a Christmas tree, and I am using a twig with spruce needles that I created on a separate layer, as the dupli object. It’s working OK, but when I am in 3D view of layer 1, which has the tree on it, in the ‘material’ view, I can see the twig object behind the tree, even though the twig is on layer 2. In render view, it doesn’t show up. Is this normal?

(Tried to attach .blend file but it wouldn’t load. Is there a limit? How do I remove uploaded files from the file manager?)