http://dmoz.icarusindie.com:2004/ Just curious if it's okay to have a large text "see also" directly over the ads.
Ermmm... not really. It's even over the border line. What you could do is, 4 example, after that see also, put something, like: See also: bla bla bla bla and keep it that way.
I've modified the script so unless there are links in that section, the section heading doesn't show up. Except for "Sub Categories"
Just don't confuse your visitors, they will click on the ads if they want and if they don't they won't no matter what you say. I would sugget you not put your AdSense accont in risk of being banned.