Would a lost phone still show as offline if someone found it and erased it?
Yes, if a device has been restored, Find My iPhone will be deactivated and the device will show as offline. If you have iOS 7 or above, you will receive an email if this occurs next time the device communicates with Apple's servers.

However, with iOS 7 and above, attempting to erase an iPhone with an active Find My iPhone will enable Activation Lock. This means the device will contact Apple's servers and be available to you. Activation Lock can't be bypassed without your Apple ID.