The situation you describe is commonly referred to as the "Rutgers Screw".
Ok ... being serious now ... I think (but I'm not positive) WR's are allowed to block down field IF the ball is thrown behind the line of scrimmage. As in, a little swing pass to an RB. Not sure if that fits the scenario you described, but perhaps it does.
I think you properly answered the concern in the OP. The point is where the ball is CAUGHT. I think one Michigan TD had the ball caught just beyond the LOS while WRs blocked downfield. That was illegal.. but the play was designed for the ball to be caught behind the LOS.
For that reason.. I think this kind of play needs a rule change. No downfield blocking of WRs on DBs/LBs before the ball is caught on ANY forward pass. If they want to run that play.. take a risk and throw it backwards. Screen passes would still be legal because the blocking largely takes place behind the LOS.
on actual pick plays.. or rubs.. the receiver doing the rub/pick.. needs to run a legitimate route and should not initiate contact. It should be called like basketball picks, imho. That is.. if the receiver comes to a stop at least a step from the defensive player he wants to pick.. that's okay. It gives the defense a chance to go around him. But he shouldn't initiate contact nor move himself to prevent the defender from adjusting..
I think the pick we were recently called for was bad call. Our guy stopped first. The defender ran into him. I have seen people speak of the Michigan receiver turning around... that's a bogus distinction. You shouldn't listen to announcers who get so much wrong. Here's the difference between the Michigan pick and out pick.
Both routes were on the QBs left side.
The Michigan picker moved from inside to outside, then turned toward the QB as he initiated contact with his ass.. in basketball a clear moving pick.
The Rutgers player moved from outside to inside, staying on the left side, and set up with a clear view of the QB. He didn't have to "turn".. he was facing the correct way already.. he faced the ball. And the defender ran into him.
I think it was a bad call against Rutgers and a bad no-call against Michigan. And GS agreed.. refusing to comment about it so as to not get into trouble with the conference.