Best of all, it's open source: https://github.com/brave/browser-laptop/blob/master/LICENSE....

Brave blocks ads by default it does not replace them.

It's my understanding that they replace them with ads from their own network, but revenue still goes to the publisher.

You're right that this is "problematic", but your initial description of "Brave replacing ads with their own", while technically correct, leaves out any subtlety. They might me misguided, but this doesn't looks as malicious...

Edit: formatting

Using your analogical line of reasoning, the equivalent would be stealing the groceries from a supermarket and replacing them with your own. I don't think Brave's proposed (but apparently never implemented) ad-replacement was quite this bad, but analogies are never very accurate.

I buy the food (content) and get the branded packaging (ads)

I then serve the same food, replacing the branded packaging with my own plates.

My dinner guests will give me credit for the plates, instead of giving eyeballs to the original branded packaging.

The fact it took a second explanation/clarification is a pretty good insight into how accepting we've become of advertising as a thing tbh.