I've got a plugin that does this more-or-less working - it works by allowing the admin to set a group moderator, and then on the user side the moderator can add and remove users from his group. Unfortunately, I came across a few bugs in the plugin hooks for groups, so this'll have to wait until we get 1.1.8 out. Judging from the number of minor bug fixes for 1.1.7, this shouldn't be much longer.
Jason Rhinelander
Gossamer Threads
jason@gossamer-threads.com
Jason Rhinelander
Gossamer Threads
jason@gossamer-threads.com