UPDATE: Create Office 365 Groups with team sites from SharePoint home moving beyond First Release

Hi Brent, great questions.  You are right to note that if the group members are dropped to 'Read' on the SharePoint site, then any resource in SharePoint will be read only, including the Notebook. 

On the questions around more advanced permissions, the goal of the new permission panel is to simplify and streamline the most common permission actions.  The panel shows the three default SP groups created for every site.  For those looking to implement more complex permission configurations, the panel provides an affordance to go to 'Advanced permission settings' which takes you to the classic user.aspx permissions management experience. 

We are also looking at expanding the simple UX to expose a 'Site Contributors' group which would assign 'Contribute' to people or groups put in that bucket.  We have it on our backlog, but would love to hear more from the community on how valuable it would be.  We've heard feedback that the contributor role is preferable in some cases where site owners want to limit members from modifying lists and their views. 

We do not have plans to allow for group owners to become editors.  Would love to hear more about that particular scenario as owners would lose the ability to manage permissions on the site, among other things, if they were dropped from full control to edit permissions.