“Ye” was still a word pronounced “ye”: it’s a second person plural subject pronoun, as in “O Come, All Ye Faithful”, or “Hear ye, hear ye.” (But not “God Rest

“Ye” was still a word pronounced “ye”: it’s a second person plural subject pronoun, as in “O Come, All Ye Faithful”, or “Hear ye, hear ye.” (But not “God Rest You Merry, Gentlemen” which is often wrongly written with “ye”.) The case of Y replacing Þ in “Ye Olde...” is unrelated.