The other day we saw a huge surge of traffic for 1 keyword. We didn't change anything for that keyword and we couldn't explain it. We caught it early, but spend about $600 without a single conversion. We decided to email Google. Google replied with a really long email saying the traffic was a result in a AOL listing from "hotsearches" (http://hotsearches.aol.com/). Basically, the links on that page will serve search results and AOL will place a link to that page on their homepage. I replied explaining that we expect to pay for real searches and not links to searches, since the links we generate a ton of curious users and not actual searchers. Google disagreed and said it was acceptable policy. Am I insane for thinking this is a total scam?
I had similar experience with Yahoo sending us ton of low quality traffic from curious surfers and decided to not to use their addwords. I know it is the same with Google