Hi all. So here's an update. After our great discussion a few weeks back, I decided to upgrade the BTO SSD storage option from 1TB to 2TB, as spending the additional $400 made more sense to me when considering all the advantages of a larger internal SSD. What pushed me over the top was the process of SSD "wear leveling" as well as the way Apple handles memory swaps on the M1s, especially given that I was only ordering 16GB of RAM. I feel that the larger SSD will not only solve (for good) my storage/photo library issue, but also provide an added bonus of SSD longevity/stability (I kept my last MBP 12 years!). I also read that the 2TB internal SSD is much faster than the 512GB and 1TB internal SSDs. And given the size and weight of the new 16" MBP (though actually a reduction for me), I really didn't want to deal with the additional hassle/weight/purchase of using an external drive for something I am accessing daily/regularly.
My new 16" M1 MBP finally arrived last Friday (after a five-week wait) and I am completely thrilled with it. Since I wanted to start fresh and not port over 12 years of crud from my old MBP, I decided not to use migration assistant or time machine to transfer photos/files. I began with photos by turning on "Download Originals to this Mac" in the Photos App preferences. It took about three days on a 500Gbps Wifi 5 network to download my 615GB iCloud Photo Library to the MBP. Notably, the first 6-7 hours it spent initially slow loading thumbnails and presumably setting up the directory/hierarchy before it began actually downloading originals. The download process went very smooth and without a hitch, duplicates, hangups, etc. In the end, the 615GB iCloud Photo Library turned out to be 668GB when listed in "About this Mac" and 705GB when I view "info" of the "System Photo Library" in the "Pictures" folder. I assume that each process calculates the photo library size a bit differently. The photo library, however, now feels very clean compared to my old MBP having legacy iPhoto remnants, etc. Thanks again for all your helpful suggestions!