One of the difficult things about plagiarism is defining what it is as your comment about the NICE web site shows. Research and scholarship obviously requires using the ideas of others, and giving them credit for it. I don't regard first year undergraduate students who need help in doing this as cheats even if that is what you inferred from my post.
I genuinely did have a laugh
with those students about the irony of plagiarising a definition of plagiarism, and I truly hope that they were not pyschologically damaged by this experience. This work was deliberately a very small part of what the were asked to do and none of the students failed the module as a result. I know that they would be very likely to be damaged (psychologically or otherwise) by ending up involved in my university's disciplinary committee for plagiarism. Avoiding this was one of the purposes of the exercise.
You said "And he also let's it be known that instances of plagiarism do occur,
but he doesn't mind if the student has honestly read that plagiarised
stuff and understood it." I think that if a student uses a definition of plagiarism without attribution when asked to explain it in their own words but with reference to what others have said, then that is a pretty clear indication that they did not understand what they have read.
I think that you are reading far too much into what I said - I don't reject them as people if their work falls below a standard.
BTW I also enjoyed reading Catcher in the Rye and Zen and the Art of Motorcycle Maintenance