I left my husband's phone number on the Lost My iPhone screen and he suddenly started getting suspicious looking texts from 'Apple Support' saying my phone was found at such and such address. I think this is no longer a hypothetical situation. I.e., as long as the phone is in lost mode and the activation lock is in place, it's still in my account and the phone is useless to anyone who finds it. Though you didn't specifically say so, I think the phone would still be tied to my iCloud account even if the passcode is removed and the data erased. I think this answers my question, although I'm not sure which question your 'No' is in reply to.