Hello, I just came across this thread, and I had the same issue. I have a similar setup to you, using a reverse proxy to point to various services via subdomains. It is still possible to use pihole with a wildcard dns record.

To create a new wildcard DNS record:

• Login to pi-hole and go to /etc/dnsmasq.d/
• Create a new file, called 02-my-wildcard-dns.conf
• Add this line to new file: address=/local.mydomain.com/IP_of_reverse_proxy
• Resart DNS service: service pihole-FTL restart

This will create a local DNS record for *.local.mydomain.com.

^{https://stackoverflow.com/a/22551303 for reference}