It is indeed possible to use custom URL schemes for authentication in an iOS app. Here are the steps I took:
Choose an arbitrary domain, like stackexchange.com, for the OAuth domain in your Stack Apps
(Optional) Make sure it has a Stack Apps Post if you want tokens with write access.
Check the checkboxes for these options:
Enable Client Side OAuth Flow
If you need something for personal use, it doesn't really matter. You can even use example.com, as long as the site doesn't redirect and change the URL. You'll need a browser and a tool like curl. Insert the client ID of the application in the URL below: