That method was counter-intuitive at first, but handy once learned.
My point exactly. It is counter-intuitive, so why have to train folks in that direction?
I have a suggestion which I believe will help in the overall user-friendliness of the site.
Although I like your second proposal (nested under Subgroups) better than the original, I think a far simpler approach would be to include a link to the Primary group on the Subgroups page. Perhaps above the Subgroups You Belong To heading, with a heading of its own: Primary Group.
That appears to be what Mark did, but you still have to "train" folks to go back to the "subgroup" tab to get to the main group, still not very intuitive to me.
I'd have to try it to be sure, but I don't think I'm a fan of having that nested list of pages open on the left whenever working in a subgroup. Especially as a group Admin, that column would get awkwardly tall I think.
If you notice in my suggested format, only tabs for the subgroup you have open would show, nested in the list. (See "Subgroup 2" is not expanded.) So I don't think the expanded list would be difficult to deal with. On my desktop, it would all fit in the same screen, but would require scrolling down on my laptop.