I would go for option 2 below.
Yes as flashing could, if go wrong, brick your router.
Preferred is to have the clients query Pi-hole directly so you see individual stats for your clients on the web GUI.
If you configured your router WAN/Internet DNS setting to point to Pi-hole only, yes this works but you wont see stats described above.
You would only see queries coming from the router.
This is preferred if it weren't for your Asus router to advertise its own IP through DHCP alongside the IP you configured in that LAN --> DNS Server field.
The pihole-FTL dhcp-discover
part that should only show the single Pi-hole IP for DNS: