I'm still working on getting together a new rulebook with a revised structure. Right now, only the Core Rules file is finished and uploaded. All references will be to the older TTLM rules v1.02.
I just want to confirm that armies do not get to take on units before or after retreating.
Page 2, right column, second paragraph under Armies section, first sentence: "Infantry and auxiliary type units may move freely into or out of Armies during the Movement Phase or when Retreating."
So, as you can see, Armies can indeed take on units during Retreat.
For my passing move, could I absorb a loose infantry into an army and then move an entirely different piece somewhere else on the board?
The infantry moves into the Army (see above), even though moving zero Areas. That unit moving into the Army uses up the Pass move.