Hi Neil,
The Groups FAQ that you mention was written for Moodle 1.6 i.e. prior to roles and capabilities (Moodle 1.7 onwards). In Moodle 1.6, teachers may either be teachers (with edit rights set to yes) or non-editing teachers (with edit rights set to no). Moodle 1.7 onwards includes these options as predefined roles.
In Moodle 1.7 onwards, I would expect that a user assigned the predefined role of teacher to be able to download all grades. Is this what you have tried?
Roles and permissions
Wnat teachers to only seeing grades from own group
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