this features doesn’t work all the time, first of all, it doesn’t replace the actual song with the one you just recorded, you have to load it again so it takes effect, and if you record audio using an external microphone or device, the audio is not replaced, you have the replaced song with the previous audio.
I’m on mac (Monterey) with latest version 4.9.6, I believe this bug has been present since many versions now.
Thank you for reporting these issues.
They should both be fixed in the Version 5.0.1 update.
I am submitting it right now - it should be available on the App Store in the next 48 hours.