After I finish the whole process, can I slap pacman on top my freshly build LTS and effectively transform it into Arch and daily drive it?
Or is it only meant "for the journey" of building it, but can't realistically be used as a daily?
It's not really intended to be a daily driver once you've built it. There is "beyond linux from scratch" that extends the system but.. normal distros with normal package managers are just infinitely more usable than a LFS system. It really is just about the journey and learning how it works from zero.
I have used NIXOS_LUSTRATE (wipes the other Linux on the next reboot) on several systems where it was not supposed to be used. Once you build nix, you should be able to boostrap NixOS from there.