Wouldn't it be possible to write some kind of local proxy server with MITM for HTTPS that modifies scripts and supplies the missing functionality for ublock origin?
partially, but it couldn't replicate all functionally. A lot of uBO rules apply to elements on the DOM. Like hiding a div with ID "#ads". That div often isn't sent as pure HTML, but is instead added to the page via JS code executing. At the MITM-level you won't be able to have rules that apply to the rendered DOM.
That said, selector based ad-blocking is still supported in MV3. So might be possible to get most of the functionality with both a MITM-level blocker and an MV3 selector based blocker.