Install QMM for AD and Exchange in Source or Target Domain?

In the target environment. 

Why, because at some point you need to decommission the source domain.   So why would you install an application into it?

Plus, in many cases, the trusts that are put into place between the environments are one way and have the target as the "trusted" environment so that's where you create your service account for the tool too.

Plus, in many cases, the trusts that are put into place between the environments are one way and have the target as the "trusted" environment so that's where you create your service account for the tool too.