I read Google's TOC and doesn't appear to be breaking any of it so I added them to one of my network that provides default ad feature. After leaving it running for couple of hours, I realized that the impressions are properly counted in Adsense account but not through Google Analytics page. Now I am suspicious - I don't want to get banned if this is something I shouldn't do. Does anyone have experience with such setup?
Yes according to their TOC, they won't allow any ads that look like theirs. So if it is not text based, you are at least ok.