Is it against the Adwords Terms of Service to setup a low paying ad that goes to a URL on your site, then 301 redirects you to another site using an ad affiliates link? Is this the kind of "arbitrage" stuff everyones been talking about lately?
It's ok to redirect the destination url. Keep in mind the "final" page will be one used to determine your quality score: "The AdWords system will visit and evaluate all pages specified by your ad Destination URLs. It will also follow redirect URLs. (Redirect URLs send a user to another website page without any action on the user's part.) To fully understand the quality of your specified page, the system may follow other links on the page." http://adwords.google.com/support/bin/answer.py?answer=38197
Also keep in mind that your display URL must match your destination URL (i.e., the "another site" that you mentioned, to which you're redirecting). If for your chosen keywords there's already a higher-CPC ad for the same display URL, then only that ad will be shown for those keywords and yours will not.
Oh ok. So the display URL part is what I was really wondering about. So you cant say the link is going to bring you to www.xyz.com/offer and have it bring you to www.bigcorp.com/affiliate=blahblah. Thanks for clearing this up