Office 365 Hybrid Deployment - Mail Loop

If you're ever in the middle of an Office 365 Hybrid deployment, you've configured everything correctly but you notice that when you're testing the mail flow from one premise to the other, it's causing a continuous mail flow (you will receive a NDR), the first thing I would suggest you look into is whether there's a gateway in the middle of your on-prem Exchange and your Office 365 environment.

Office 365 Hybrid is only supported if you have nothing between your on prem Exchange, and the O365 environment.  That means no IronPorts etc getting in the way.

I recently encountered an issue where there was a continuous mail flow symptom.  Office 365 was trying to deliver the email to on prem Exchange, it was caught up in the IronPort and then it tried to deliver it back to Office 365.  To get around this I opened Exchange up to the internet by NATting Port 25 on a different WAN IP which would bypass the IronPorts entirely.  I amended the Connectors in Office 365 so they'd connect through that address, rather than through the IronPorts.

Once this was done, the issue resolved itself immediately.