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Hello
In tournament environment where Terrain and objectives are set up by TOs and fortifications are set during army deployment, should objectives effectively block placement of fortifications (say Imperial bastion) over objectives, or should it be allowed and objectives pop out on top of it?

Personally, I prefer having to place fortifications before objectives. (And best, placing fortifications before placing terrain.)

But of the options you've provided, I'd go with "no placing fortifications on top of already-placed objectives." Otherwise, you end up with an objective getting "displaced" to the top of a Fortress of Redemption, or else being completely inaccessible by being under it.