Rancher external DNS docker ip instead of rancher host

No, there is no way to configure/change it to use container IPs instead of host IPs. I’m not sure why you would want to use container IPs. Could you elaborate why you are trying to do this?

The external DNS is to be able to have a fqdn for a service that you can point to and not worry which host the containers are actually deployed on within the service. The container IPs are an internal overlay network, so not sure why that would help to configure to the container IPs.