Okay, this took some time and a lot of research. First this is possible. Secondly, we had a server that was bought in 2012. It had no SSD, 1TB of hard drive, 32Gig of memory and two processors (8 cores) so it wasn't a bad machine. In fact, we are now using this as our test development machine. We decided to move to an infrastructure where we didn't have to maintain the hardware but wanted to still have control of the operating system, updates, etc. After looking at Azure, AWS and other offerings we went with Azure. One because we could easily upgrade (a few clicks) to better hardware. The cost for the server is around $250/month (Today) for a D2. A D2 has a dual core Xeon, 3.5Gig of memory and a 100Gig C drive SSD for the operating system. We added a 1TB drive and set SmarterMail to store everything on this drive. They don't "guarantee" a static IP which is the biggest fear. We have been assured and have confirmed on multiple channels that the IP we have we will not lose as long as we stay in the data center and don't shut the machine off. We can upgrade to a faster machine if needed (don't think we will as we only use 1.5Gig of memory) and can always add more drive space in a matter of minutes. We have been able to easily setup SSL certfificates as well.
Now for the transfer. This was the ultimate scare as we wanted as close to zero downtime as possible and with 500Gig of data that's a lot. What we did was set a daily sync that we started manually a week before and let it run (inbound data doesn't cost anything). We contacted our clients and scheduled times (1 hour per domain so that we had room to debug, etc.). As of this email 29 of 40 on this server have been completed. We copied and manually edited the domains.xml as outlined in the SmarterTools documentation and it worked perfectly. The key I think for migrating is "slow and steady".
So with all that said Azure is a great way to go at least for us and now we don't have to worry about having outdated hardware and can easily upgrade as client demands change.