Can I ground a digital gauge ground wire to the (-) negative battery terminal?

It doesn't really matter if you go to the negative battery cable. It's not going to hurt anthing.

The negative battery cable grounds to the chassis anyway. If you get your ground from the body of the car, you have an added resistance in the circuit back to the battery's negative cable, depending on how far away the ground is from the battery.... But that shouldn't be significant...

Just ground it to the battery like they say to do... It won't be a problem. They just want to make sure you don't try to get your ground from some part that's not well grounded to the chassis.

i would just ground it somewhere near the gauge, using a really clean ground.

be sure you use a big enough AWG wire for the ground, especially if you use the battery ground - so you dont have a drop, as mentioned.

good luck.