VFS cache is much better than the old cache backend but you need to update rclone. This module is based on an older version of rclone. Download the repo as a zip and replace /binary/rclone-arm with the Arm Android build from here https://beta.rclone.org/v1.54.0-beta.4766.75de30cfa/testbuilds/ . After renaming, zip and install via Magisk manager.
Afterwards in your param file, set CACHEMODE=full and ADD_PARAMS=--cache-dir /sdcard/rclone-cache to set the cache location. For external storage, use a file explorer to find the location of the storage, normally in /storage/