legally they are allowed to do this. they own the copyright to the melody and words so they can legally do it. not saying that it's right or it's okay tho.
Interesting but doubt it. I'm pretty sure you need to talk to them if it's not fair use (this wasn't fair use, maybe you intended parody but it wasn't obvious so it's a cover). Anyways, to be sure I would have to see a sample deal YT has with a publisher + a YT creator.
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