If that would be your DNS chain, there would be no need to enable Pi-hole's Conditional Forwarding, as your UDM router would already answer DNS requests for local names, before they reach Pi-hole.
But from your description, it would seem that your UDM router's DHCP distributes your Pi-hole machine's IP address as local DNS server as well as using Pi-hole as its upstream, creating a resolution chain similar to:
+--(via upstream DNS servers)----> cloudflared
|
client -> Pi-hole -+
| |
^ +--(via Conditional Forwarding)--> UDM Pro --+
| |
+--------------------------------------------------+
Your debug log confirms this at least for your 192.168.7.0/25 subnet, and this would indeed close a partial DNS loop for local names, in particular for any lookup or reverse lookup of such names or IPs that your router's DNS server doesn't know to answer.
This could happen for all your Conditional Forwarding rules.
If you'd opt to keep using Pi-hole as your UDM router's upstream, you could try to leverage Pi-hole's Group Management to short-circuit DNS requests from your router that would establish a loop, see e.g. Dnsmasq[1035]: Maximum number of concurrent DNS queries reached (max: 150) - #2 by Bucking_Horn