Yes, you can use CiraSync to exclude contacts as a synchronization source when using an Office 365 distribution list as the source. Please do the following:
- Create a contact collection from an Office 365 distribution group.
- Click the drop-down arrow next to the Office 365 distribution group under Collection Preview.
- Click on the ellipsis next to the user you wish to exclude.
- Click on Exclude.
You can now perform a synchronization using this new contact collection with the contacts you wanted to exclude as a source for your synchronization.