What would happen if you used Googlen Adsense and then used the revenue you generated from that to pay for Google Adwords, and basically eneded up with free traffic. Is that against teh TOS?
That is what is called arbitrage. Actually people look at it in the exact opposite way. You get traffic using Adwords and then make money from Adsense program from the traffic gained. Note that this is a high risk strategy and for any chance of success needs huge investments and full time involvement for real time tracking of ads.
i don't think doing it the way he describes is arbitrage (i may be wrong, though ; ) in any case, a lot of publishers have been asking for a long time to have their adsenses monies go directly into their adwords accounts. who knows if it will happen, though. there's nothing in the TOS that states you can't use revenue to buy adwords, so as long as you're not breaking the TOS to increase your adsense revenues, you should be ok. -kpaul
If he meant simply using the revenue to buy traffic (may be even on different sites), then I stand corrected.