I think you should rethink your approach on this, as you are going against youtube's TOS where you may not download videos that you did not upload yourself. You are also breaking copyright laws by downloading and distributing other parties copyrighted content (without explict permission). I suggest that before you go down the path of monetizing other people's content, that you actually do your own due diligence and assess the risk of possible litigation over nothing.

PS: your method is bypassing the monetization of youtube. When in doubt you should consult with a lawyer in your jurisdiction, and this is not legal advice.

Good luck!