As far as I know, the current situation is:
- Netflix Android app up to version 3.7.1 works with DNS redirection and can play all content on the Android device. But as of a month or so ago, the Chromecast Netflix app will no longer accept casting from version 3.7.1 - it displays a message saying that you must update your Android app.
- The current version of the Netflix Android app (up to version 3.8.3 at least) only works partly with DNS redirection. It will allow you to browse all content, and it will cast it successfully to the Chromecast, but it will not play that content locally on the Android device itself.
This applies if you are blocking Google DNS. I don't know what happens if you are redirecting Google DNS with iptables commands - I have heard that it works erratically.
The situation is the same with all the DNS redirection services I have tested, and as far as I have read it is the same with all of them. Apparently the Netflix app is now doing something new with Google DNS, and for the Android app nobody has quite solved it. Netflix is continuing to update their app, so the situation might change at any time, for better or worse.
(Note that after updating the Netflix Android app, you must initially start it and log in from your home region.)