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SmartThings v2 Hubs can process some automations locally:

Some preconfigured automations can run locally.

Manual, on-demand control of a device or SmartApp through the SmartThings mobile app always requires an internet connection to the cloud and cannot be performed locally.

The documentation does not list which devices in particular are able to function without access to the Internet. Since the bulbs use ZigBee, it seems logical that they should be able to run locally, but I've heard people say that they had trouble with it.

Can Philips Hue bulbs be controlled locally if the hub's connection to the Internet is lost with automations?

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If Internet connection is lost, BUT electricity is still on AND hub has battery working ok you may have chances to succeed. Since ZigBee connection is there you may have connection between hub and bulb.

ZigBee is a technology for quite short distances, so if all works ok and then for example LAN can be used when in normal, then the distance between these two parts of your system becomes a signifigant factor. LAN works ok for long distance but same with ZigBee may be way too much.

Answer to your question is that your setup will work, but be aware of the distance of hub and bulb.

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