@Jason Sewell
Thank you for your post!
When it comes to "DisableMandatoryInOutlook", I found the available advanced client settings for classic AIP, and the equivalent for the unified labels. You should be able to Exempt Outlook messages from mandatory labeling by running:
Set-LabelPolicy -Identity Global -AdvancedSettings @{DisableMandatoryInOutlook="True"}
I've also added the 'office-exchange-server-mailflow' tag to this thread to see if our Outlook and Exchange mailflow community can look into this as well.
If you have any other questions, please let me know.
Thank you for your time and patience throughout this issue.