Can I block youtube ads with a transparent proxy like squid ?

I haven't tried that, so I'm not entirely sure. I just focused on the easy methods that most people will gravitate towards.

Try it and let us know what you find!

What about a self-hosted youtube auto-downloading queue list ? I’m fine with .mp4 files !

Sounds like yt-dlp. Lots of people use that to get around ads, and also for data hoarding.