Typically I do what you suggest. You could also exclude them from syncing over by blocking them from your MQL flow.
I see no reason to not dump competitors into a queue and then delete them from SFDC later. You could in fact have a nightly batch to ensure this happens:
Smart List - Competitors with SFDC Type IS NOT EMPTY
Flow: Delete Lead in SFDC
You might ask them if you could monitor the competitors by keeping them in the system so you can watch form fill outs and page views so you know what they are thinking about you!