Yes, you're correct, Downunder. International naval custom dictates the ships rendering honors while underway, but this discussion is about ceremonies on land, where the national is never dipped.

My first 2 years in the military were spent in the Presidential Honor Guard in Washington, DC, and I can't for the life of me remember how the national ensign of a visiting foreign dignitary was handled during a ceremony. I'm pretty sure it was carried by itself by the Army, so I have no first hand experience with it. That was long ago.