Interactive (i.e. end-users) Clients should be using OAuth instead of app passwords. This will allow your users to use their own Office365 credentials for SMTP.

For servers and non-interactive clients (e.g. copiers/printers/toasters/coffee makers) I would suggest something along the lines here: https://learn.microsoft.com/en-us/exchange/mail-flow-best-practices/how-to-set-up-a-multifunction-device-or-application-to-send-email-using-microsoft-365-or-office-365#compare-the-options

I use https://github.com/YoRyan/mailrise

Mailrise is apprise under the hood. It's an SMTP server that converts all the emails it receives to push messages depending on the To address in the email.

I think what you're doing is fine, in fact, it's one of the Microsoft recommended methods of doing it.

In my case I have postfix running as an open relay inside my network that then relays to Amazon SES. But I have my own domain.

I imagine doing something similar where you relay to o365 might work.

I've started using SMTP2GO for all my notification. Up to 1000 email/month it's free. So I don't have to rely on Google/Microsoft account/changes that they do every once in a while.

Acronyms, initialisms, abbreviations, contractions, and other phrases which expand to something larger, that I've seen in this thread:

[Thread #344 for this sub, first seen 12th Dec 2023, 10:55] [FAQ] [Full list] [Contact] [Source code]

If you are just sending notification emails to your own account then you can use SMTP directly to O365 without authentication and it will be delivered as long as it’s being sent within your tenant (if your home IP isn’t in your SPF record it may get delivered to junk however)

This is how we handle scan to email using MFPs in our org. No credentials, or even a mailbox for the outgoing sender, required

Best bet would be to setup postfix or opensmtpd as an open relay. Just make sure it is only accessible in trusted networks though!!

https://docbot.onetwoseven.one/services/postfix/

You’d want to set the listen address to 0.0.0.0 and use a non-loop back interface.

You're trading one security issue (profileration of app passwords) to another one (an unauthenticated relay). Is it worth it?