Comment 2 for bug 960393

#2 is fixed in the web client - the profile group drop down in patron edit and patron search displays based on your permission tree (and are indented to indicate children)

#1 I think is partially resolved by the addition of the Permission Tree Display Entries functionality (Administration -> Permission Tree Display Entries).

This functionality only affects the drop down menu in the patron registration/edit and not in the patron search. Further discussion is likely needed of whether this functionality should be extended to the drop down in patron search.