I've just visited a website and was foooled by what looks like navigation links between the graphics at the top and the row of google ads underneath. Can you have a look and see if you think this is legal http://www.blinkerdog.com/
Well if your adsense account is not banned yet... I would quickly removed the images above your ads (big adsense no-no). And you are obviously trying to trick users into thinking the top link unit ads are tabbed sections of your site. This site will get a high CTR for a very short time before you get the dreaded email from google.
Yeah, while I admire the effort, that's obviously against TOS. When it comes down to it, it's all about intent. Are you intentionally placing an ad in such a way that the visitor is fooled into thinking that it's part of your page or navigation... It's a fine line because you want the ads to blend well as to not look like blatant advertisements, but not "trick" people. We're all guilty of violating Google TOS here and there, but most of us don't do it on purpose and probably get off with a warning or nothing. This guy will be getting an email from Google soon.
You should remove the links before you get banned, it is extremely illegal in the point of view placing images near ads. Peace,
However this site has pretty stupid ads placement. Colors doesn't much. He can have as much ctr with legal placement of ads. He can't get more thatn 15% with this site