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Yeah, the brokers will net out - internally if possible, and on a dark pool if not - to minimize transaction fees.
Those pools are used partly to minimize price impact because that reduces adverse selection. The article is complaining that this weakens the short squeeze, but it also improves the execution price for the buyers. You can't have it both ways.
As for whether Citadel are dumping retail sells on the market to drive the price down, but keeping all the buys ... I doubt their HFT arm coordinates with their hedge fund, and those buys have to go somewhere. The idea that the high-frequency traders are going to take a massive unhedged short position (selling to retail) so that a different desk can avoid losing money on their existing medium- to low-frequency short position is ... implausible. Compliance and Risk would both be shitting bricks.
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useless
I'm pretty sure that most retail brokers will do this, and always have done this - otherwise the cost per transaction makes retail share trading entirely (even more) pointless.