Nigel,
Thanks for the feedback.
The product pages do not have the categories in the breadcrumbs. It is just home > product.
The thing is, the category pages that were indexed are already deindexed. And, we didn't build any links to the category pages as it was a new e-commerce site. I will try to see if there is a faster way of mapping the native categories to the hosted navigation pages.
Although it is much faster and more user friendly, I do regret using hosted navigation on the site now. Also, I may not use the hosted navigation service at the end of the year. I am wondering if I should hold off on the 301s, as will have to reverse the 301s if we cancel the service. What are your thoughts?