I don’t think this is feasible via Apple’s “official” “sideloading” method for the EU because of the Core Technology Fee.
If I had to pick only one of the two, I’d prefer local blocking because it cannot only not load ads, but also remove the placeholder/frame the ad would’ve been in. It’s also better at circumventing anti-adblock scripts.
That being said, DNS-based blocking is great outside of browser use, and it blocks many ads and tracking attempts in mobile and desktop apps.
A combination of both is best, really. I use uBlock Origin in the browser (or AdGuard Pro with Safari on Mac and iPhone) and then NextDNS. NextDNS is configured rather conservative though, because it can cause things to break otherwise, and that’s hard to manage when you’re not the only use of your network.
It’s great that Bitwarden integrates with other services. It’s just very convenient to have it completely built in, especially for inexperienced users. You don’t need to do any setup, and if the password manager is smart enough to suggest using an alias automatically when a registration requires an email address, it’s a no-brainer.
I still think if I was strictly anti Google that would imply giving them not a single dime.