Look at the article linked to it. It has a render of a pause ad being a banner that shrinks the video player somewhat, but the paused video is viewable.
That’s a lot of faith that the ads would be SFW, let alone not distracting.
YouTube wants you to keep watching the videos. The more time you spend on the site the more ads you see. They care about finding the balance of acceptable ad load to maximize ad space, which requires a consistent user base. I have faith that this is their objective. Also, videos take time to load and a user hitting pause is unpredictable. A light weight display ad is probably the best technically feasible way to grab a user’s attention in that brief moment of hitting pause. Especially when pause means a user wants to mute audio to do things like take a phone call, a video would turn off users to the platform.
