I am having some transmission work done on my car, and will be flushing it while connecting an external ATF cooler.

The transmission place suggested against the external inline filter on account that it will hinder oil flow.

Is this external filter best avoided or installed?

better to get one, as T/KH onwards had no external filter, just an internal one. that way you have one filter that is easily accessible and can be changed reguarly.
my TF was lucky as it got a internal/external filter.

i planned to do this when i have my cooler installed in the future...

Trana place is wrong and this is very bad advice.