New
#1090
1) Not sure about builds 16251/16257, but on 1703 (Build 15063.502) you'd start the sysprep process at the Region screen. I think it's pretty safe to assume it'll be the first screen your presented with after the installation reboots complete.
2) I played around with a couple of scenarios leaving the old Users directory and profiles on the drive I was moving the new install profiles to. I have 1.5TB of music/movies in my Music folder and it takes between 4-6 hours to copy that back into my new user profile, so I'm looking for ways to reduce that as much as possible.
In my testing I found that the user data was still present after sysprep step. If I renamed the Users directory to something else while in audit mode, installation always renamed/moved them to Users. You will still have to create new users and move the data from the old profile directories and as others have stated, you will likely need to reset some permissions and/or at the very least take ownership of the old files. If you want to keep your new profile directories "clean" (ie, user jeff has a profile directory named jeff rather than jeff01) you'll have to move the old profiles to subfolder (ie, D:\Users\Oldprofiles) before creating any user accounts.
I recommend you perform some testing within a virtual environment to completely work out the process that works for you before attempting to do it on your production/daily device. I'll echo Kari's words of caution -- backup your data BEFORE attempting on your daily use machine.