Yes. Lots of people bid on Adwords low-cost keywords to drive traffic to their site where they've targeted Adsense high-cost keywords.
I am doing it. As Hammerfall said, bid of low-cost keywords but those who actually match to your website content; otherwise google might stop showing your ads (as they did to me)
PLaying the arbitrage game can be tricky... you need to make sure your LPQ (landing page quality) can pass the Adwords "sniff" test.
All of You people who are doing it, cn please share your opinion: those visitors comeing throguh Adword ads are clicking Adsense ads, or not really .....
As per my experiance, mostly dont click if they are satisfied with your content; if they are not satisfied or need more info. & good ads appear, they usually click. If good ads don't appear, they search again; so I've put a google search box below the stories
The new algorithm update does make it more difficult to buy cheap traffic from AdWords for sites containing AdSense. But that being said it's still possible to make a profit from this.
I'll second this... It is difficult, but it IS still possible... I am not doing it, becuse i make money doing other things... But i hear about peple who are still doing it successfully. Tim