MCU sinking current from a higher voltage source
Would sinking current (through M1) when the output is driven HIGH be a problem?


Depends highly on the MCU in question. Most MCUs have much more complex pin circuitry in place - to prevent ESD or latchup for example. 

A small current flow into the MCU ist usually not a problem, but there is a catch: Modern MCU can sleep with very low current flow (single digit µA and below). A higher current flow into the MCU could thus rise VCC above tolerable levels - possibly damaging the chip.

Note that you dont't need to enable the high side output on the GPIO for your application at all. Just set the pin to input mode when you turn off the low side. Some µCs allow 5V on a GPIO pin (sometimes only when VCC is present). Be sure to check the datasheet.