I currently have an acoustic guitar that I completely insert a lavalier microphone into the sound hole which is then connected to a zoom h2n recorder and from there to my various pedals (reverb, delay, etc). It works good but I was wondering if an electric guitar would work better especially when it comes to effects. Or would my setup work just as well?
Even on solid body guitars, there are sometimes feedback problems when using overdrive, distortion, etc. A mic inside an acoustic will surely exacerbate those problems.
Using reverb, echo, and such like won't cause too many problems from that point of view, although the volume control on electrics is often used as a control for the effect, which may be problematic in your set-up.
I assume you’re using the Zoom as a preamp/phantom power source since you’re using a mic and going there before your effects.
Certain effects are well suited to both acoustic and electric such as reverbs, delays, compressors but some are suited more specifically for electric like distortion, overdrive, wah wah, etc.
The bottom line is acoustic and electric guitars have completely different characters. You should play whichever instrument serves the music you’re playing better, or better yet even switch back and forth between the two as you see fit. Effects are secondary, the effects serve the instrument, not the other way around.