It feels like it would also be helpful if advertisements were rate-limited (for example, if an advertisement is declined three times, don't show it again for another 24 hours).
As far as I know, this dialog is only supposed to pop up for password requestors in your contact list, your own devices (which have an Apple ID based signing credential that can be verified offline) etc., so this seems like an easy to fix bug on Apple's side rather than a conceptual weakness.
So if someone spams me with Bluetooth advertisements, and I decline three times, and then I want to connect some other device that also uses Bluetooth advertisements, now I have to wait 24 hours before I can do so? Seems not ideal either.
A simple solution: On the dialog for the Nth advertisement, also provide a "disable AirDrop for 1 hour" choice. If the user wanted to receive these again, they can re-enable AirDrop from Settings or the Control Center.