Don’t display items in the Trash when doing a search (or a preference to control)
thanks for the suggestion, we’ll consider this for future releases but right now it’s intentional.
Maybe enable ‘Get Info’ on the trash, and allow me to check ‘Exclude from Search’? Or course you would need to fix the issue with Exclude on groups not working correctly 
As far as I know it is working as expected. But exclusions are not inherited as each item can have multiple parents and therefore the settings could be inconsistent.