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Unless you are using encrypted DNS, I'm not how that helps -- even using your own resolver, your ISP can sniff the content of the requests (though it might be a legal rather than a technical hurdle -- they can only legally monetise requests that go to their servers -- depending on jurisdiction?).

In the context of DNS, "authoritative" refers to the servers which hold the actual records for a domain.

I think the term you are looking for is a recursive resolver (one that will perform a full name resolution for a client).

Your traffic still has to go to those servers, so your ISP still can track the terminal server IP, can't it? (TOR, or tunneling aside)

An almost unlimited number of domains can be hosted off a single IP. That said, the SNI header can still be sniffed on an HTTPS connection.