I don't know of any straightforward (i.e. that does not require root access) way to block the ads in the Instagram app. I would guess that this is why they push the app so hard (as with Twitter).
So how come there aren't uber-apps (ha ha) that can spoof apps, looking to servers like real apps, but protecting users?
Well there are such things, but due to the security model they typically require root access. This is not great because rooting your phone makes it much more insecure.
The other option would be to implement an alternative Instagram app that does not show ads. I assume that Instagram has various measures in place that preclude this.
I was imagining more like "alternative Instagram app". Maybe more like a browser with macro capabilities. But obviously, Instagram would try to block it.
That's a viable option indeed. I don't do that because the Instagram mobile website is significantly less nice than the app-each tab of the app is a separate web page that loads fairly slowly for instance. So in the end, I use the app, report the ads I see as not relevant, and suck it up. I usually only see one ad per day so it's not the end of the world.