Your destination could really be anything you want. You might use display url Mysite.com and have destination url set too Mysite.com/whatever.html Or suppose you bought a new domain. First redirect your domain to your landing page. Then use your New domain as your Display url..and your blog site as your destination url.
Opps..I found the answer to my own question while browsing the help section on Adwords. Anyway for those who might be curious too..here's the link: http://adwords.google.com/support/bin/answer.py?answer=76846