No worries Jon. I thought we were onto a winner here - the behaviour seems to be exactly what I'm looking for - but unfortunately once I set that permission on the Non-editing teacher role to 'prohibit' I did not see any change. My grade report still looks exactly as above.
I have also tried to restrict the Non-editing teacher permissions on group management in an effort to fix this. Sadly I am still seeing no change.
I feel like this is the setting I need to change, but I'm just not seeing any effect! I've triple checked that it's prohibited for this role on both the site level and the course level, but perhaps I'm missing something obvious...
EDIT: nevermind, I figured it out! With my new knowledge about the particular permission I was looking for, I came across this question: https://moodle.org/mod/forum/discuss.php?d=258859
It didn't solve my issue directly but OP made reference to the course being set up in Separate Groups, which was what I was missing! So obvious, but I was too hooked up on sorting out the roles to look at the course settings!