Setup Assistant from Time Machine on external drive to new Mac.
You seem to have a good understanding of the options. I always use Setup Assistant and, when prompted, use a Time Machine backup to "restore" the data to the new Mac. Don't use Wi-Fi; it is too slow for the large amount of data.
Will MS Office files be included & accessible on new Mac OK, especially Outlook email?
Office, as with all the other applications, will be restored to your new Mac. You might have to go into your Microsoft account to activate the software on your new Mac, although I found activation worked by using one of the applications in the suite to sign into my MS365 account.
Also, any tips & potential hiccups to be aware of, etc?
Some experienced users here have the practice, which I follow, of creating a new Time Machine backup for a new Mac. This is best done with a new external drive (thus setting the use of the drive back to zero) and keeping the old one initially as a fall-back but ultimately for use elsewhere. I've sometimes found too that even when I tried to migrate the old backups to a new Mac that the new Mac would fail to continue with the old backups and I had no option but to erase the drive and start Time Machine all over again.
The basic message is let Setup Assistant do it's work and don't interrupt it. Your new Mac will start up as a copy of your old Mac. Then, remember to follow the steps in Apple's support document What to do before you sell, give away, or trade in your Mac.
