I have the Nextcloud AND the iCloud Drive sync running on the same folder. There has been no issue at all, it really worked fine.
Recently my harddisk got full (because I imported loads of photos to iPhoto) and my iCloud reduced the size of the files in the sync folder to 0B. I guess it is something like virtual files in Nextcloud.
My question: Can Nextcloud deal with the virtual files from iCloud? Or is it a real bad idea to use both sync clients on the same folder?
Apple has not made it possible to offer any integration with icloud. So, your method is the only method afaik.
Sounds risky. You could always duplicate the folder into Nextcloud as opposed to syncing the same folder directly using rsync or similar. Use some command line tool to make the copy, then you aren’t worried about sync issues with the real thing.
Hope this helps. I recommend starting to copy full system backups to external disks before you proceed any further with this.