From Wikipedia:
From the author:
So my guess is that the use of the name "Brasil" isn't incorrect. The land was named after the red resin which looked like a brasa, not the South American pau-brasil which wasn't discovered yet.
When Portuguese explorers found these trees on the coast of South America, they used the name pau-brasil to describe them. Pau is Portuguese for "stick" (or, by metonymy, "wood" in general), and brasil is said to have come from brasa, Portuguese for "ember", meaning "emberlike". The wood of this tree has a deep red hue, which may be why it received this name. Pau-brasil had been earlier used to describe a different species of tree found in Asia and other places, called Sappanwood which also produced red dye [x]
From the author:
The expedition briefly came ashore, and named the landmass “Brasil” after the red resin from the pine trees indigenous to the island.
So my guess is that the use of the name "Brasil" isn't incorrect. The land was named after the red resin which looked like a brasa, not the South American pau-brasil which wasn't discovered yet.