//looks at his own mailbox size. Hovering near 40 gigs. Ah well, I use 365..which is a biz class email system, it's meant to store capacity.
I'm not using some residential "10 gig max mailbox" system.
Some business types work heavily in email....I work with quite a few of them. Their email is their primary business tool, file storage, CRM, and all that stuff. With good biz grade email systems, yes you can use it that way. If you're on @snet.net or @aol or whatever el-cheapo IMAP solution your budget website vendor gives you for free...sure...not good! There's no practical way to comb through and extract individual emails and stick them in some other format (that would just take time, have cost, and require other computer resources to store). Think about it..either store it HERE (in my 365 mailbox), or store it THERE...(like in OneDrive)...either way, you're using computer resources and expense. The term "virtual e-waste"...meh...not a thing with me. Storage is dirt cheap. Compared to other types of data a business stores (files, documents, databases like SQL)...email really is miniscule in comparison of storage and expense. I see so many people get wound up about it..yet...look at all the rest of the data a business has...really, the email is miniscule in comparison.
Searching still works fine. I don't run on some way underpowered ancient computer that might take 30 seconds to search my email, mine runs fine no matter how far back I'm looking.
Security risks? MFA accounts, there's the majority of it. Have some compliance rules to keep certain types of data marked and on a deletion schedule? 365 has those data lifecycle management tools to automate that too!
Bumping 30 years doing this gig for small business clients, the huge majority of it with Exchange/Outlook...and right now around 300 separate business clients we manage, we just don't see problems with "email power users". And we have a lot of clients >50 gig mailboxes!
Circling back to the OP's point of "about 1.5TB of PSTs"...I read that is not a single 1.5TB PST...but a bunch of PSTs which amount to about 1.5TB total. So to me that's separate PSTs. Company size of around 25..that makes sense...some are still around for archiving. I'd probably upload those to shared mailboxes for archiving.