I noticed that http://www.blogherald.com/ has Google Ads under 'Related Links'. I thought as per Google's policies, it's misleading and not allowed. Am I correct?
related links is ok i think, im not too sure on this but it doesn't harm though. but you dont want to do the same just place them without puting anything on top of it.
I think its against the Google adsense Terms of Services and Policies because it can generate invalid and mis leading clicks Recently at the Google Adsense Blog it was made clear that the best way to save your publisher account from invalid clicks is to either have no text around your ads at all or categorize it under the text i.e. "sponsors" "sponsored ads" or "advertisements" any other heading like "related links" is surely mis leading and can get you banned
it's against the adsense tos. people whose are doing this is getting a big risk. they may be banned because of this