Forest Green Hobbit
Does this mean that Player two can retreat to that (now empty) region with any block, even if it didn't move through that region but was present in the attacked region at the start of the turn?
YES - as you point out, border control is the deciding issue, not the presence in the area as main defenders or reserves. Note that this would allow the defenders orignially in the area to retreat through the controlled border in round 1 of the battle even before the defender's reserves arrive in round 2.
Is it possible for blocks in a victorious group to regroup into a (friendly) region that has an unresolved battle pending, acting as reserves?
NO: "5.5 RETREATING...• .. Blocks cannot retreat to Contested or Enemy areas....5.6 REGROUPING ... All of the rules and limits of Retreating (5.5) apply to Regrouping, except Border Control."