I'm unclear there is a security issue with dnsmasq -- maybe leaving a transaction alive too long (but then again, what does "too long" mean these days?). However, I haven't looked into the "vulnerability" referenced to be sure (the "malformed name" aspect of the report doesn't fill me with confidence).

I contend that creating signatures over the data at the sending side and then validating those signatures at the receiving end is superior protection to encrypting the channel over which the data is transmitted. Protecting the data is end-to-end. Protecting the channel is hop-by-hop. If you could ensure that the client speaks directly to the authoritative(s), the protection would be equivalent. But that's not how the DNS is operationally deployed (dnsmasq is a perfect example: forwarders really shouldn't exist).

I would agree with you that operationally, DNSSEC deployment is lacking (i.e., water is wet) and the requirement for both the authoritative side and resolving side to simultaneously implement is a (very) heavy lift. However, even your Tranco stats show that there are pockets of non-trivial deployment (e.g., governments) and I believe the trend is increased deployment over the long term globally.

Fortunately, it's not either/or. I personally prefer DoT/DoH to a trusted (i.e., that I run) resolver that DNSSEC validates. Unfortunately, as dnsmasq doesn't appear to implement forwarding to DoT/DoH resolvers, you're left with DNSSEC or not using dnsmasq (which is what I gather you're recommending).