I do this on my home network. It works well, so I encourage you to build this out.
As an added bonus As a service you could point the dns entries to your own web server and serve up cat pictures or motivational pictures in place of ads.
The solutions I use were already "built" before this one existed. I was using djbdns to block ads before there were adblockers.
I think its great that more users, through DNS-based ad blocking projects, may see how controlling their own DNS is useful, perhaps in ways they might not have imagined.
However the last time I looked at it, I recall this project was defaulting to using open resolvers run by third parties, e.g. Google. Maybe I am remembering incorrectly since so many projects like to use these third party resolvers.
In any event, that is not how my solutions work. A third party with such delegated (ultimate) authority from the user is not part of the solutions I designed for myself.
Also, I never used dnsmasq as part of any solution. I have a strong bias against it for a number of reasons. If I recall correctly, pi-hole relies on dnsmasq.
As an added bonus As a service you could point the dns entries to your own web server and serve up cat pictures or motivational pictures in place of ads.