Hi Nathan,
Reading your post you made me realize that yes, if I take a step back and think about it, it might make more sense to just enable the group layer by default, and instead disable the sub-layers that should not be visible initially. Then if the user wants to see a specific sub-layer under that group, he/she can check that sub-layer.
It makes it less likely that a user will be confused since he/she will have to uncheck the group layer themselves to have this issue happen.
Of course I would prefer to also have the sub-layers disabled (visually, like in the 2nd image) if the group layer is unchecked, which is my question. However I think the suggestion above is better then what we have now, so I'll do this as least.
Thanks again Nathan