I understand sensors should always be grounded/referenced to the Sensor 0V (C125 Pin 9), and not the battery/chassis ground, because the 5V/8V sensor power (C125 Pins 8,7) is regulated relative to the Sensor 0V.
But what about CAN "modules" and other powered devices such as RS232 GPS?
For example, the Motec L10 GPS wiring diagram says that it should be powered by the 5V sensor lead, but grounded to the battery ground. That seems like you are mixing circuit loops. Can the battery and sensor grounds develop a voltage difference? If so, then using the sensor 5V and battery ground is mixing circuit loops, which seems like bad practice.
A similar question arises with CAN modules such as tire temperature monitoring systems. The Izze system required 5V or 8V power. If you use Sensor 5V or 8V should you then use Sensor Ground? It is not really a sensor circuit... It is an independent device that lives on the CAN network. My first instinct was to add a voltage regulator off the battery lead, and power the CAN module with that, and reference to battery ground, rather than using a sensor voltage and ground....