Seems to me that there is a fundamental error in the logic in the question.

The Group discount works on the order total, so there are three possiblities:
1. The order has no "excluded" items, so the group discount should be applied
2. The order is entirely made up of "excluded" items, so no groupd discount is available
3. The order has some "excluded" and some not "excluded". What happens then?

Or have I missed something?