Are there any special steps that need to be taken if migrating from SBS 2008 to SE 2016 if Exchange has been turned off on the SBS Server and mail is already flowing to/from Office 365?
I'm wondering if there are any "hooks" into Active Directory that have to be removed before the migration?
Not really. Just follow the guide and read the first paragraph of chapter 21. You need to uninstall Exchange Server 2007 from your SBS 2008 and that means all Exchange Services need to be turned on and started. The below Powershell command sets them to start Automatic. After you have done that reboot the server and follow the instructions from the guides.
Get-Service | Where-Object { $_.DisplayName –like “Microsoft Exchange *” } | Set-Service –StartupType Automatic