How can I use a group to assign catalog labels

Just exactly the same way you assign standard labels. You can drag a group of images from the Collection Viewer (or from Windows Explorer) onto a group node in the Catalog Explorer. That will assign the catalog labels of the stored group and remove the excluded labels to/from the images. You can do similar things in the Catalog Assignments dialog (F6), by selecting or unselecting group nodes.
 
Remember, included labels are always added and excluded labels are always removed from an image during label assignment.