Yes, functions can return non-owning references. However, those references do not "borrow" their target, in the sense that they lock others out. That is the Rust model, and OP does a great job covering its limitations.

So, with the understanding that "borrowing" means "locking others out", a group parameter borrows the group for the duration of the function call. If it borrows the group as mutable, no other group parameters can borrow the group. If it borrows the group as immutable, other group parameters are limited to borrowing the group as immutable. This is reminiscent of the Rust model, but the XOR rule applies to group parameters rather than references, and borrowing lasts the duration of a function call, rather than the lifetime of a reference.