Hi Murray,
In this case I would say no, changing Windows Server 2016 Datacenter to Standard using DISM is not supported, whether the server is running on-premises or in Azure. Microsoft supports edition conversion from Standard to Datacenter, but not the reverse, so there is no product key that would make this a supported downgrade. You can confirm this by running DISM /Online /Get-TargetEditions, which will not list ServerStandard as an available target on a Datacenter installation.
For Azure VMs, Microsoft does not provide Windows Server 2016 Standard images through the Azure Marketplace; deploying Standard requires a custom image. However, if these servers are running as native Azure VMs, you should not need to purchase Windows Server 2016 ESUs, as eligible Azure-hosted VMs receive ESUs at no additional charge after support ends on January 12, 2027
For more information, you could access to these website:
Plan your Windows Server upgrade
Prepare to deliver Extended Security Updates for Windows Server