If you knew your largest forum competitor was violating the TOS of Adsense which would lead to their account termination, would you contact them to tell them what they were doing wrong or would you go straight to Adsense? It's hard for me. As I could easily get the forum in question banned, but I think morally I should warn them about what they are doing wrong to give them a chance to change it. On the other hand, without Adsense the site is going to decrease in activity as they spend their revenue on advertising, meaning more traffic to their main competitor - being me. So.. what would you do?
I would report it. I wouldn't have any problems with my conscience at all. The rules are plain for everyone to read - if your competitor has chosen not to, getting banned through their own ignorance, then that's their problem. Before you report them be sure that your site is up to scratch otherwise they might try and cause problems for you in return.
Scared of a little competition? I wouldn't do jack. Google would figure it out themselfs and id be a good sport bout it.
It's images directly next to the ads, no border or anything. I really don't know whether I should report it or not lol.. Maybe they weren't aware of the rule change about images next to ads so I should warn them?
If its against TOS, I would contact them... and then contact Adsense after if there was no change (especially if they were big.. that means more advertiser funds are being drained away). They'd be caught evently..