Death to Adwords..whats next?

I was chatting with a friend today thats in the early stages of startup. Though his company's original idea was totally not focused on this he was asking me about ad networks because he was interested in building one for his product. Seems like everyone is starting to see the value here even though King Google is current reigning champ in this space.
Google revolutionized the online advertisement model with its Adwords product. Before they came around online advertising was difficult to quantify, track and monetize on. Advertisers could approach individual publishers and purchase/place their adds on their site based on relevant content. With millions of sites and probably an equal number of advertisers this became a networking nightmare let alone the fact that most publishers ( independent ones specifically) do not want to deal with advertisers.
Publishers want to do what the do best.. produce content. Their job is to bring traffic through the site and having advertisements put some money in their pockets. This is why Adwords was a gold mine. Now advertisers can create campaigns for their ads and produce a different classes of adds to be displayed. The adwords dashboard shows you a whole slew of statistics so that you can customize your campaign to your needs and ensure that its as efficient as possible.
For a long time this worked well, publishers started adding adwords advertisement to their site to drive some revenue and advertisers where able to ensure their adds where being targeted to a specific demographic based on the content of the publishers site. Now we are starting to see this model abused by the creator itself.
Dell and google got into bed together a while back and came up with a VERY interesting way to exploit adwords. By "cybersquatting" dell comps would reroute miss spelled URLs through a Adwords service to display to the user advertisements. No more 404 pages, a utility detected this error page and sent off a query to google. HELLO! How many dells are out there doing this?

The screenshot below shows what the Dell-branded Google search results page looks like when you make a typo in your address bar. You can’t even see the search results in the picture (800×600 resolution) because the entire top of the page and right side are plastered with ads.

This page isn’t being shown to Dell owners just because they have the Google Toolbar. In fact, uninstalling the Google Toolbar won’t get rid of it. Dell and Google are now installing a second program on computers that intercepts all sorts of queries that the browser would normally try to resolve. This program has no clear name and is very hard to uninstall. In some circles, people would call this spyware.

So the funny thing about adwords and their success is that its actually fairly difficult to compare them to how effective banner ads were prior to Adwords. I mean undoubtedly they are better but taking into account things like this Dell/Google issue and presumably countless others how much is Google really milking it?