The remove ads upgrade does remove all interstitial and forced ads in the game. We got a large number of people asking for extra continues by optional ads, so this was added as an option for the ad-free version. you will never be forced to watch an ad with the upgrade, but it will always be optional to watch more ads if you want continues above and beyond the basic 1.
This is stated in the description of the ad-free upgrade ("This purchase removes pop up ads that may appear later in the game. Please note this does not remove opt-in video ads").
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