i have started many a sago palm pup like you describe. but when you start them from pups they dont usually have roots like that, just the little base. that one has been pretty much living on its on looks like and not mooching on its parents much if any. usually they recommend to cut the fronds off when you transplant them (if not in container) or start pups. it will have a lot of starch reserves stored in its base so dont be hesitant to cut it back if you think thats what you need to or want to do. or if you want you can plant it like it is and wait and see if it begins to yellow. it may or may not, but when it sprouts new fronds they will probably be a little shorter and stockier at first anyway so you may want to just so all the leaves look proportional later on...
its really up to you. you wont kill it by cutting them back or not cutting them back. the reason they tell you to cut them back when starting pups is b/c the energy reserves in the crown are needed to develop the roots to support the plant. b/c yours has such a good root system start its not really necessary to cut it back but it wouldnt hurt either and would make the plant look tidier when it does sprout new growth.
i see no need to cut the roots back, but if you choose to do so then i would also cut the fronds back. just plant the crown about halfway down in the soil. (another reason for cutting of fronds is b/c it had no roots to support the plant --like keep it standing up, not like support it with food in this case-- and the wind will catch the fronds and knock it right over. but yours has roots! so you are pretty much good to go once you get it in the ground...