Mail delivery to not-yet-migrated accounts in O365 staged migration

I'm about 10% through a staged migration from Exchange 2003 on-prem to Office 365's Exchange Online.
The question I have is how do the migrated users that are now successfully using Exchange Online send email to the users still on the on-prem server?

When they try they receive an NDR with the error "Remote Server returned '550 5.1.1 RESOLVER.ADR.RecipNotFound; not found'".

I only have the users that have been migrated have an O365 user account.  Those who have not and are still on-prem do not have a O365 user account - yet.

How do I configure the setup (in O365 I assume) so the email addresses for accounts that are still on-prem get delivered to our on-prem server rather than just failing delivery because the address doesn't exist in O365?
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Reece DoddsAsked:
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Vasil Michev (MVP)Commented:
Where is your MX record pointing at, the local Exchange? If this is the case, simply login to the O365 portal, go to the EAC -> mail flow on the left -> accepted domains -> double-click the domain in question and set it to Internal Relay.

Once this is set, Exchange Online will first try to deliver the mail internally, and if it's unable to find a match for the recipient, will send the mail based on where the MX is pointing at. Obviously, this will only work in your case if the MX does not point to EO.
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Reece DoddsAuthor Commented:
If I change this setting is says I need a valid outbound connector.  Is this correct?   If so, how do I create a connector that works?

I tried this setting yesterday but emails weren't being delivered anywhere (not even bouncing back).  A message trace just said pending for the internal emails that were sent after the connecter was added and the domain was changed from authoritative to internal relay.
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Vasil Michev (MVP)Commented:
The connector is only needed if your MX points to the cloud. Otherwise you will get the lovely NDR:

Remote Server returned '554 5.4.6 Hop count exceeded - possible mail loop'

And again, the setup will depend on where your MX is currently pointing at.

Here's also post on the official forums you can use as proof:

http://community.office365.com/en-us/f/158/t/151580.aspx
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Reece DoddsAuthor Commented:
Excellent!  
Email delivery to both migrated and non-migrated accounts works fine.
I assume that the delivery will be to the cloud account if/when I have an account created for them...?  So I shouldn't create an account for them until I'm ready to migrate their data or at least reconfigure Outlook on their computer and change the target address on the on-prem server?

Once all accounts have been migrated to the cloud and I change the MX records for this domain, I should just change it back to authoritative?
(sorry - I'm a newbie to O365 and Exchange Online)

Cheers
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