Can I safely downsize my tires (and rims)? What functionality will be lost? Concerns? I need tires for my 05 Ford Freestyle SEL AWD?

Driving Ford Freestyle AWD (215/65R17) BUT I have a full set of new tires 225/60R16 & factory rims (from Buick Park Ave)

If the wheels fit on, there should be no problems other than a small change in gearing. And that should be no big deal as new and worn tires provide different gearing also.

The 16 inch tires will be about 1.4 inches shorter, but will be wider by about 1/2 an inch. Your speedometer will read faster than your actual speed If the rims fit, and the bolt pattern is the same, you should be able to use them

Are you sure the bolt hole pattern will work?

Maybe, assuming that the Buick rims have the same bolt pattern (they might not) BUT a smaller tire will make your speedometer read faster than you're going and your gas mileage will be a bit less. You also need to be sure the rims have a similar offset so when you swap them they don't rub on something like a tie rod, a-arm or ball joint. Offset is the distance from the inner edge of the rim to the bolt plate. If one set of wheels is deeper than the other on the inner side, there may be some interference.

Dealer

You would be slower because circumference would be lower.

Close, but no cigar!
The bolt patterns are close but not the same.
Buick- 5x4.53
Freestyle- 5x4.5
That .03 inches means it just will not work right, I know it is only about 1/32 of an inch, but that 1/32 of an inch means that even if you can get them on- they might not fit true to the center of rotation (the axle).