Is this behaviour normal for pure breed labs? If that was a cat I'd say it was a bored and distressed animal.
I've never owned a lab, but this doesn't sound like normal behavior. I'd say your analysis is correct: Bored and Distressed. I don't think there's much you can do while the dogs are in your care. You MIGHT get an improvement while you're there, but as soon as their owner comes back, the old treatment and behavior will return.
Chris