This is no longer correct - when operating on the selection theres no need for an active object.

Logic in this function could be simplified by making the active-object case a list of one.

So:

if (!only_active) {
    for (ctx_base = ctx_selected_base_list.first; ctx_base; ctx_base = ctx_base->next) {
        changed |= ...;
    }
}
else {
    changed |= ...;
}

Can be replaced with:

for (ctx_base = ctx_selected_base_list.first; ctx_base; ctx_base = ctx_base->next) {
    changed |= ...;
}

This may popup a menu for every object that has multiple groups.

Probably better to show a menu with all groups used by the current selection?

Color and pass could use all objects in the selection.

Don't think this is correct, since its possible objects from the original selection would have been de-selected, then reselected based on matching properties.

Best move this directly below CTX_data_selected_bases(C, &ctx_selected_base_list);

Have not yet looked into the popup menu for the selection by groups, i guess that would be done via uiPopupMenu. Do predefined layouts already exist for the groups or what structs / enums could they be generated from?