Suppose I write an Ad, which contains my keyword in the headline, line 1, line 2 and even in the URL, so basically 4 instances of the keywords used in the same Ad. My question is will it make the Ad more relevant? Will it Increase my quality score? And more importantly will it reduce my CPC.
If people click on it more Google will see it as "more relevant". Ads in and of themselves do not define relevance - how users interact with those ads is what defines how relevant they are. If my first answer is true, yes. If my first answer is true, yes. Test it. That's the only way to know for sure.
So, basically you are saying it will depend on CTR. That means, higher the CTR lower the CPC(this is what google says anyway) But if it all depends on the CTR, why do they have to check our landing page, which is obviously about content/text. Since, they have now started factoring in landing page as well, won't they be factoring keyword instances in the Ad?
It's not 100% about CTR...but there's no doubt that CTR is one of the most important (there are many) elements in determining the quality score...which has a direct impact on the actual CPC.