I don't think thats what happened at all. He killed his brother to make his mangekyou permanent. There was no body switching, spares or eyeball ripping after that point.
Although yeah it is kinda gross.
He took his eyes and implanted them into himself.
What I didn't quite understand was that Itachi said that it was common within the clan to kill friends/brother (at least pre konoha founding).
But how come he and Madara are the only Mangekyo users? (Itachi says that at some earlier point in the manga, somthing like
"If you obtain it, there will be 3 of us" when he talked to Sasuke)
Maybe this whole eye stealing thing may explain why Kakashi was able to obtain the Mangekyo Sharingan. After all he got his eye from Obito.
This chapter showed how ****ed up Itachi really is. Killing his own clan so that Sasuke could grow his spare eyes.