You are right about the visitor not knowing what is going on...I thought about that because that's what I am thinking when this happens to me!
Try putting the replacement image on another domain or subdomain which doesn't have the anti leeching logic.
Well , in my suggestion what i do is ; When 404 screan appears i create a custom 404 page backlinking to my other site this way i let people use both sites , and in a chain reaction ( which really works) gives us oppurtunity , to exchange traffic by both sites.
I have a different style of 404... Mine redirects to a page with all my sites on them, and a general links to the invalid link on that website... Something like: http://www.myimage.us/invalidpageorimage Peace,
that might be good in promoting your other sites but from the visitor's point of view it's not a good choice because he/she doesn't find relevant info from his/her main interests (interests that brought him/her to your page)
I would think its downright insane to run adsense anywhere near a 404. Why? Your pic might be hotlinked on a page in a porn site.