Huh? You most certainly can. I mean, somehow "ssh koyomi" works here on my network, no matter if machine I run this on uses system-resolved or unbound or something else. My DHCP server supplies options 119 and 135 and that's all that's necessary to make it work.
What you can't is to have a CNAME with a bare hostname i.e. make "foo.example.org" magically resolve to "foo.local" when you're on that particular LAN with "search local" (and $deity knows what if you're not). To be honest, I'm not even sure what's the point of this setup, unless you do split-horizon (but then why not respond with "foo.local." proper?)