After doing this, I was able to fully patch the server through WSUS- This has been confirmed on two servers in two different environments.
It seems the most important change is the defer updates option to unchecked, but the other ones could also cause update issues based on what I've read around the net.
WSUS detects and sends updates to all systems, including the 2012 servers.
WSUS will detect but not send updates to any of the 2016 servers.
WSUS detects that the server exists but that is about it.