I have a log that is several MB in size (about one dozen quite active clients). It works without problems. dnsmasq keeps the log file open while running and therefore if you move the file it will happily write into the moved file instead of the new one (as the pointer to the virtual memory location does not change and renaming does not change where the file is physically located but only its name).
I tested this already (you can see it is in the code of the pull request): The log has been flushed at midnight. When I reboot, logrotate states that the file is not older than one day and simply skips the rotation procedure without having us to worry about it. Tried with three reboots within an hour - no rotation happened for me - did you see something different that would require implementing the changes you suggested (with checking the date)?
EDIT: You can see this when running the command manually with the verbose option:
# /usr/sbin/logrotate -v /etc/.pihole/advanced/logrotate
reading config file /etc/.pihole/advanced/logrotate
Handling 1 logs
rotating pattern: /var/log/pihole.log after 1 days (5 rotations)
empty log files are not rotated, old logs are removed
considering log /var/log/pihole.log
log does not need rotating
(note that the log was several hundred KB is size at this time, so the line about empty log files is only informative)