I see a lot of advertisers pushing keywords into their display URL even when the display URL doesn't go anywhere. Is this a legitimate method to increase quality score & ctr? ex: website.com/keyword
Yes - as long as the domain name is accurate, you're allowed to add a 'folder' name that may not actually exist, and it gets bolded when it matches the searched for keyword.
People add the keyword to improve CTR. It does work most of the time. And yes the keyword also gets bolded and stands out. Higher CTR leads to a better quality score...