As a professional YouTuber, the main issue I instantly see with this is the lack of monetization.
I think people who don't make videos for a living severely underestimate how expensive it is to produce high-quality videos people want to watch. This isn't like writing a tweet or even posting a picture on Instagram. Even a decent 20-minute video can easily take 40 man-hours of high-skilled labor.
I have a pretty small channel (~100K subscribers) with no employees and relatively low upkeep costs (a few hundred dollars a month), and even I could not make this work if I didn't get at least $500-$1,000 per video on average, since it just takes so much time and money.
Most channels with more than a million subscribers are likely founders working 60-80 hour weeks with multiple full-time employees supporting them. You cannot do that in the hopes of viewers donating $5 here and there.
And yes, there are people who make content for free - most of them fail to hit a hundred views per video. And the difference between a million views and a hundred is 10,000x. You cannot create a platform without big users.
I think any real competitor to YouTube nowadays would have to be backed by a big corporation that can pay big creators million-dollar deals to make the switch. Otherwise it's just dead in the water.
You can publish to both and even better your own domain that simply points to your video hosting provider. Long term you want to own your distribution channel as much as possible, while using YouTube as your lead generation tool to drive true believers to your site and premium distribution channel not owned by YouTube. Otherwise, you will always be subject to platform risk via YouTube's whims which has destroyed many content creators. That's the long term winning play IMO and it doesn't preclude tools like FreeTube.
You say your target is $500-$1000 per video and let's assume you do videos weekly. That would mean your optimistic goal is $4500 a month. Let's say you create a voluntary donation subscription at $5 per month for people willing to support your work. That means you would need 900 true fans, patrons, or whatever other label you want to give them to hit your $4500 goal. That's a 0.9% conversion rate from subscribers to donators. Doesn't seem that impractical when looked at in those terms. This is often the default monetization model for small podcasts because RSS feeds don't have built in ad revenue the way YouTube does.
There are 100M+ channels uploading on YouTube regularly and only 2-3M of them are monetized. Not everyone wants to upload videos on the internet with the explicit goal of making money. Professional creators are a very tiny minority, and a platform like YouTube will always be better suited for them (your "small" channel with 100K subscribers is actually in the top 0.5-0.1% of YouTube). There is no reason for Peertube to go after this specific demographic.
its fine for the genre of video thats just someone narrating while filming with there phone and almost no editing. if someone is doing something interesting, i prefer this to something well produced, its more candid and relatable, and lacks the artifice most projects designed for youtube have
Your issue is assuming that this is trying to replace YouTube for those who wish to try and make money from this. I suspect this is much more closer to a Google videos or YouTube back in the day which was pretty much just random videos, plus lots of conferences on there (which don't get enough views to monetize). This can easily replace that and is something I would support. YouTube hasn't always been monetising and it is good if we have a competitor against it.
Honestly I found that the videos I come to Youtube to watch are either personal, non-monetized hobby video, or just a head talking to camera.
Virtually all of the content I watch on youtube does not fall into this category. The content I watch is a mixture of raw footage, a guy speaking to a camera with minimal editing for 10 minutes (think Rick Beato, for those who know him), edited down footage of people working (pool cleaning guys, chefs, etc) or people playing music.
Frankly I wouldn't care at all if all of your over-produced thumbnail-bait disappeared overnight.
It doesn't have to be for your use-case. e.g. KDE has their own instance. It would perhaps be a good fit for MIT to host their OCW videos, or for Khan Academy to host their material, or people sharing conference talks, or governments, or quick home DIY videos, or vlogs and idle musings, or hobbyists showing/discussing their thing they like, etc. Videos that are meant to help people to better themselves or collaborate fit better on a platform that doesn't try to be a constant sales funnel.