Yes, the traditional built-in SEF links will still work. SEF Advance will handle requests for old URLs by redirecting to their advanced equivalents. The correct Permanent Redirect header will be returned so search engines will know that they need to replace the old links.
For better ranking on search engines you are encouraged to rewrite the old static links anywhere there you have control. All links within Joomla! / Mambo will change automatically as you install SEF Advance. Even all internal relative non-sef links within the content will be automatically translated to SEF Advance.