I would use phrase or exact match. This way you can include the misspelling in your pay per click ad copy (so it would be bolded) if you feel it is not too distracting to the user. You should create a PPC ad for each misspelled keyword phrase.
Misspelling is always part of my campaign. It wont generate as much as the exact keyword but it still generate some traffic to my site. I would use phrase and exact matching most of the time
No, Google doesn't frown on it. The pay per click advertiser knows what the searcher is looking for and the advertiser is just anticipating it. If the PPC advertiser provides good results, Google is happy. You see Google will offer correct spellings for misspelled searches so what is the difference on what you are trying to do (except you are eliminating 1 click). The only problem you may run into is your landing page will (likely) not have the misspellings on it. If it doesn't, then your quality score may suffer a bit however you're probably paying very little in CPC so you may not notice.
JohnMally; don't waste to much time with misspellings of common words - google "corrects" them by offering the user to redo the search with the spelling corrected - also broad and even exact match often still show your ads