There will be a fee to withdraw money from ATM machines in Croatia.
However, there is also a fee to convert the Euro to Kuna here and unless
you are converting a lot of money in one transaction you won't make much
savings.
If you do convert a lot of money, you have the added inconvenience of
carrying a lot of cash with you, which may be lost or stolen.
For peace of mind and convenience, I would suggest using the ATM abroad.
Withdraw moderate sums of money when you do use it, it's worth taking
the hit of a few Euro in my opinion to avoid the hassle of carrying cash!