Yes, if you have local AD, you should install Azure AD Connect to sync the users. That way you can also license the users. There isn't an extra cost if you use Azure AD Connect. https://learn.microsoft.com/en-us/azure/active-directory/hybrid/whatis-azure-ad-connect
Regarding the automatic MDM enrollment, the existing AD joined devices need to be Hybrid Azure AD Joined (this means joined to on-prem AD and registered in Azure AD). You can configure this in Azure AD Connect https://learn.microsoft.com/en-us/azure/active-directory/devices/hybrid-azuread-join-plan
The users will also need an Intune license and Azure AD Premium (EMS licenses contain this for example)
Then you can use the GPO to enroll the devices into Intune.
Note that when you were referring to Autopilot with the Intune connector for AD, this for new devices (you can reimage existing devices) to go through the Autopilot OOBE, enroll into Intune and then join the on-prem domain. Some background info about that https://oofhours.com/2019/07/15/inside-windows-autopilot-user-driven-hybrid-azure-ad-join/