The site in question is.... http://www.graphictopsites.com/ ... is the image ad (where the 2nd ranked site should be) against adsense TOS?
Wow, that is very well blended, it is somewhat micleading so I would say yes. But I would ask G just to be sure.
Nice site - well blended. If they were being picky (and knowing AdSense, that's possible) they might disagree with the ads being fitted into the background images.