No, it doesn't replace the peasant either.
You're doing everything correctly.
But for some reason, the game doesn't recognize this archive. It might be because you're not launching it through the original .exe file, although that's unlikely. Sometimes, when you download a file, there's a setting that blocks it because it was received from another computer. It might be causing the problem; you need to remove that setting and save the changes.
In general, do other mods work for you? (I mean not large collections, but smaller ones).
Does anyone have any other ideas why it might not be working?