Your demo app with my blog had some disturbing results. The google ads that normally appear were covered over by one of your ads AS WELL AS a second ad that would appear when my mouse was in the empty space.
I like the idea of empty space ads, you have a good service, but I won't deploy it on my sites if you are going to be overwriting parts of my page. Lets hope this was some ill-advised feature of the demo, and not actually production system behavior...
I'm 99.99% sure it's the demo code. You see we pull down all the HTML + CSS from your site and insert a bit of our javascript code to your site when we show the ads. This could cause some irregularities of the ads appearing as you mention.
In fact I just previewed your website (http://www.emptyspaceads.com/websites/preview_url?website%5B...) and while I do see the ads appearing sometimes over AdSense (because we're using the snap to margins behavior) I don't see them replacing the AdSense ads as you mention. What is your OS/Browser?
And finally, I absolutely need to put a disclaimer that lets you know as a user you can specify the divs that you consider empty space (the "Let Me Decide" option) by adding the class ID attribute "ESAemptyspace" to any HTML elements you'd like the ads to appear in. On our part, we'll be sure to ensure that the ads only ever appear within those elements. The valid issues you're bringing up could be mitigated with this option.
I like the idea of empty space ads, you have a good service, but I won't deploy it on my sites if you are going to be overwriting parts of my page. Lets hope this was some ill-advised feature of the demo, and not actually production system behavior...
Screenshot: http://mirwin.net/images/emptyspacead.png