This is no different than RaWThis variant Ambush rule can lead to defenders attacking before their ambushers, which is something that i don't think ever happened in any iterations of D&D's surprised rules. It's easier to pull off but fairly weakened. Personally i prefer more difficult / impacting Surprise rules.
Yes; in this variant, everyone acts in the first round, but opponents acting before you will catch you by surprise (you have no reaction).In this variant, do all characters go in the first round, and surprise just negates the reaction?
It’s not very clear
If all sides notice each others, there is no ambush RAW since no Surprise occur.This is no different than RaW
In RaW, if the ambushers don't roll well on Stealth and don't beat the player-characters' passive perception DC, they'll be seen and the ambush fails. Then, if the PC roll better than the ambushers on their initiative, the defenders will act before the ambushers. So it's happening already, and failed ambushes have been part of D&D since the beginning.
In this variant like in RaW, if you roll badly on your Stealth, your ambush will fail. The main difference is that in RaW, it is possible to fail the ambush but act first in combat (not possible in this variant), and with this variant, the ambush can also fail if the PC roll well on Perception (check is made against flat DC in RaW rather than contested roll).
[edit] also by RaW, a lucky ambusher can have two full turns before their opponents. This variant does not allow that.
By RaW, you could surprise your opponent and win initiative. Round 1, you act and your enemy doesn’t because surprise. Round 2, you take your turn before theirs; therefore having two turns before your ambushee’s first turn.If all sides notice each others, there is no ambush RAW since no Surprise occur.
RAW it's impossible to have two turns before an opponent since every creature in combats gets 1 turn. A surprised creature still gets a turn even if it doesn't act or move and get to use reactions after it's first turn.