First, you can track by IP address instead of MAC address. Go to:
Security Appliance/Addressing and VLANS and select "Track clients by IP address".
https://documentation.meraki.com/MX-Z/Monitoring_and_Reporting/Client_Tracking_Options#Tracking_by_I...
The rest of your question is hard to answer. It sounds like the XO circuit might deliver two separate services, and the 3750 might be used to break them apart. The 3750 could be doing inter-vlan routing, and if their is a lot of traffic it might not be suitable to move to the MX.
It is highly probably you could configure DHCP forwarding on the 3750 to send the DHCP queries to the MX and have it become responsible for DHCP.
You may be able to replace the 3750 with an MS350. It is also possible the 3750 is doing things an MS350 can not do.
I think you need to get a local Cisco Meraki partner to help you. If you log into the portal and go "Help" (in the top right hand corner) and then "Get Help" and scroll to the bottom it will list your Cisco Meraki sales contact. Ask that person to refer you to a Cisco Partner in your area with the skills to work this out.