OK, it turns out the FW is not the sole culprit. Switching OFF the SFE/STP/FW will just extend a "honeymoon" boot up time, where the DNS processing is fairly fast.
Looking at the IP table setup file (/tmp/.ipt) there are two rules defining what do to with DNS request coming through on BR0:
These rules are for redirecting any dns from clients on br0 to the Pi even if another dns server is set.
If you Pi is located on the br0 interface, a routing loop will occur. The request from the Pi will be redirected back to itself. You can solve it by moving the Pi to a separate interface or add a .not Pi IP to the rules.
disable "Forced DNS Redirection" on Setup page (if any)
disable all dnsmasq options, especially "No DNS Rebind", leave dnsmasq on/enabled
add these:
no-resolv
no-poll
server=<piholeip>
<blank line>
remove all additional firewall commands
save after each step
reboot
This is the CLEANEST setup / working solution to my initial problem.
When I DISABLE the "Forced DNS Redirection" on Setup page, it will remove the first two IPTABLE rules, which redirect all DNS request coming through br0 to the router.
This was slowing the DNS queries and thus required the firewall rules mentioned above to get fixed.
With @jerrytouille settings all is good now.
NICE TO HAVE:
How would I "squeeze in" an ultimate fallback ... just in case my kids drop the PI into the milk?
How would I "squeeze in" an ultimate fallback ... just in case my kids drop the PI into the milk?
add these static entries on setup page in this order:
<pi hole ip>
1.1.1.1 <or any other public dns>
1.0.0.1
check enable strict order dnsmasq option
remove all additional dnsmasq options
<save each step>
reboot
I can understand WHY; if for whatever reason the RT thinks the PI is gone ... it will start using the other DNS servers ...
Would be nice if there is a way to increase the trigger threshold of the DNS server switch (instead of ~50ms ... make it 500ms). This would slow the DNS resolution down ... but then it would NOT leak my DNS queries as long as my PI is up and running.