I think it's deinitely possible to do a group activity where children of differing abilities can all benefit. In fact, that's an important skill to learn if you're going into sped!
For example, some kids can answer questions, sing songs, listen to books, etc; while others can point at pictures on a picture board, make hand movements to a song, hold pumpkin manipulatives, etc.
What I'm more concerned about is how your professor, head teacher, assistants, etc all dissagree about what is developmentally appropriate for group activities. You don't want to get stuck in the middle! Can you sit down w/ your professor and talk about what the research says and how it applies to the kids in this class? Before your formal observation, could you talk to the lead teacher about trying out a group activity to see how it goes?