I actually think this is 100% the correct move practically, as someone who thinks advertising is unethical. Keeping it out of this popular option while remaining open source allows the original to be clear from "wrongdoing" here and does not put so much pressure on creating an arms race. Then, the fork just adds sponsorblock, and things are ok.
As I see it, it's similar to the situation with FOSS passkey options. Currently the big projects are complying with all of the (increasingly silly, imo) demands of the standards org. If they did not, there would be significantly more pressure for attestation, in which ultimately only Google/Apple/Microsoft-controlled options would be permitted. Complying allows a fork to patch out the user-hostile behavior.
But NewPipe clearly circumvents YouTube ads so not sure how they wouldn't have faced pressure otherwise, and it's actually more so that YouTube doesn't care about sponsorship segments as they make no money from it so NewPipe would be even more in the clear if they didn't block YouTube ads but blocked sponsorship segments.
There is no wrongdoing though, except for the people that decide to build machines to waste other's time. Imagine spending your life on that. There's no need to carry water for the people who dedicate their lives to making everyone else's lives a little worse. Like if the wealthy paid people to go around littering (which, in a sense, is basically what mailers/inserts are).
Passkey likewise is a retarded idea with no user empathy, and by going along with their demands, you still push people into monopolistic ecosystems because the only way to use it in practice is with a cloud sync service. There's likewise no need to carry water for it. Anyone advocating for it outside of scenarios where you have an IT department to maintain it is either a fool or a shill.
Also NewPipe is still niche and appeasement isn't going to do anything. They'll end you when they feel like it. c.f. the tightening of the Android software monopoly in general. At some point they're just going to block NewPipe entirely. It's not like Google is thinking "well it's okay if they block our ads as long as they allow in-video sponsors." Nor are they ever going to think "wow maybe we should have some morals; maybe our global surveillance system we've built was a bad idea. I can't believe we didn't realize that!"