How can a lost locked phone in airplane mode be unlocked?
How could a locked phone with a recent Android OS be unlocked, taken out of airplane mode, and home screen accessed?


It wasn't. The person simply pulled out the sim card from your device, added into some other device and installed WhatsApp on it. WhatsApp doesn't have any login authentication, it will simply let anyone use it as long as they have access to sim card. This also explains why he/she could post in one your groups and not directly PM some contact (he/she doesn't have any of your contacts).


  How could the remote lock not work, assuming somehow someone opened up the phone within the lockout interval?


Not possible in the 1-2 minute lockout interval you mentioned. Any kind of exploit will require at least few hours of work.


  I saw the phone in the city I lost it on Device Manager (where I executed the remote wipe). How could it be there, but nowhere visible in my Google Maps timeline or Gmail login history?


Maps timeline isn't 100% accurate and up to date. Device Manager pings for real-time location. GMail login history shows only places where you actually logged in. You were already logged into your accounts when you went to that place, unless you didn't remove the account and added it back, it won't show login attempts in GMail.

I don't see any signs of breach in security of your device from the information you have provided.