It is a mystery and will forever remain that way.
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It has never been revealed. Many people will tell you that Edd has slicked back hair as seen in the "Lunch Room Rumble" game on the CartoonNetwork website, however, this is NOT part of the Ed, Edd n Eddy canon as the game wasn't created by AKA Cartoon (The makers of Ed, Edd n Eddy).
I can't find any information that the show Ed, Edd n Eddy was sued.
no
he is what you want him to be
I think he is