I was getting 300-400 ppc visitors a day - highly targeted and highly converting. So I decided to add adsense and boom, no more traffic. The paid traffic via adwords immediately stopped. Anyone else had this experience?
I'm pretty sure you are allowed however if the purpose was to arbitrage then I as the site owner cannot make money, but if the intention is content it should be fine.
My understanding is that it's allowed, but you shouldn't have any Adsense ads on your landing page because it will reduce your quality score (but elsewhere on your site is OK). http://adwords.google.com/support/bin/answer.py?hl=en&answer=66238 You may not be intending arbitrage, but it may look that way to Google.
the safest to do it is not to use adwords with your adnses site so that you do not get into the murky TOS of Google. Just my 2 cents JulieV
a clear case of arbitrage, you were getting targeted adwords traffic that you wanted to convert into adsense clicks... this is not just harmful to your ppc traffic but you are risking your adsense account too