It's certainly frowned upon. Google has recently done another round of cracking down on this practice: http://dailyppctips.com/category/arbitrage/
Funny, I just finished reading an article about this... According to a Google spokesperson, this is part of an ongoing quality initiative on its content network: "At Google, we are always focused on how we can make the user experience as positive as possible while still providing value to our publishers and advertisers. As part of this effort, we continually conduct automated and manual reviews of publishers and sites that violate our policies. In some cases, violations of our program policies will result in termination from the AdSense program." It's not clear how many sites were affected in this batch of reviews.