With regards to hiding the group items on a report, you'll need to modify the Estimate report. You can use the existing Estimate report and edit the DetailReport section. Add a Filter String, so that EstimateLineGroupRecordID is less than 1. This means that it would return 0 record for the items in a group on the report.
In your case since you are not checking 'Print items in group' then you don't have to worry about a second condition. For other users, who may be using a combination of showing items in a group and for some groups you do not show their items, you would want to add another filter where IsPrintItemsInGroup equals true.
Hope this helps.