Can england use its transports to move out of the hostile zone, pick up troops, and then move back in to the hostile zone (and then conduct an amphibious assault as normal if the subs are defeated) or must the transports, if they retreat, end up in a friendly sea zone?
Yes, this is legal, as long as the sea zone in which the transports are loading units is friendly.
Further (and related) are there ANY restrictions on movement caused by starting in a hostile zone rather than a friendly?
The movement must be done in the Combat Movement phase. It must follow all of the rules for Combat Movement, except that it need not end in combat.
