Migrate-d2d UI - Where does sites/default/files source content go?
I'll post this as a preliminary answer, but please feel free to comment with better suggestions.

Step 4 (Files) of the migrate_d2d UI asks for path where the source files can be found.  I took the conservative approach and uploaded the legacy sites/default/files file system to a separate source directory on the development server, but I don't see why you couldn't directly import the legacy file content into the sites/default/files directory on the destination server.

At least this seems to work so far.