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> Firefox on iOS is just a skinned version of WebKit/Safari

So are Chrome, Brave, and Edge. And yet, they support ad-blocking extensions (and so does Safari).

This is not the cause though - other third-party browsers on iOS can do ad-blocking, and also can use system-installed extensions.

They could also launch an alternative browser engine for iOS and iPadOS in the EU.

> It's because Apple does not allow Firefox to install an actual browser on iOS.

That's incorrect, and Firefox doesn't blame Apple for this. Many 3rd-party iOS browsers do ad blocking natively and/or via extensions. https://orionbrowser.com/platforms/ios