The purpose of group-by is to pull items out of the outline hierarchy into different logical groups, whether projects, tags, priority, contacts, etc. If you want the outline hierarchy, you would just use the outline view without grouping. I guess you could use group-by project with the option to include “Projects anywhere in the hierarchy” turned off, but then again, you would be better off not grouping by projects, but just filtering by project (is:project) in a non-grouped outline view.
All this said, I don’t think it’s that big of a deal, just think the idea of zooming into a project in group-by project isn’t particularly consistent with the group-by design. There are also some bugs associated with it that are too long to get into here (eg, zooming a project in List>Group By Project has issues) that should be fixed if this is the encouraged approach.
I also probably wouldn’t mind the visual aspect of it as much if the project icon were meaningful and not the random split diamong thing… but that was a debate from a few years ago.
