Add to PnP Provisioning template using CSOM

OK, see the changes I've made below.

You should implement FindDocumentLibraries to get the document libraries in your site. I think you can either use list.RemoveExistingContentTypes or remove the existing Content Type through a ContentTypeBinding (both included in my code below).

In addition to everything required, you should also initialize the list variable further to reflect your existing Document Library's configuration to prevent undesired changes after applying your template.

var documentLibraries = FindDocumentLibraries();
var template = new ProvisioningTemplate();

foreach (var documentLibrary in documentLibraries)
{
     var list = new ListInstance();
     list.RemoveExistingContentTypes = true;

     var listContentTypeToAdd = new ContentTypeBinding();
     listContentTypeToAdd.Default = true;
     listContentTypeToAdd.ContentTypeId = "0x01010003860C260AF340CB8B30D74959AB0FC4" // Custom Document

     var listContentTypeToRemove = new ContentTypeBinding();
     listContentTypeToRemove.Remove = true;
     listContentTypeToRemove.ContentTypeId = "0x0101"; // Document                

     list.ContentTypeBindings.Add(listContentTypeToAdd);
     list.ContentTypeBindings.Add(listContentTypeToRemove);

     template.Lists.Add(list);
}

 Hope this helps!