My biggest question would be whether the domain would be likely to get natural type-ins. Some keyword combinations are a lot more conducive to that than others.
If yes, then buying the domain might indeed be a useful idea, depending on the cost.
Would Google really pay the "CPC" listed
Nope, not ever.
The first reason is that Google would be taking their own cut from every click before they paid you.
Another reason, which people who don't advertise with AdWords might not know, is that advertisers don't always get charged the full amount that they're bidding. The cost of clicks can vary if advertisers come and go, and can sometimes be discounted significantly if your ads get a better clickthrough rate than the competition.
or are there other factors such as Page Rank and back links etc
The biggest factors would be how many advertisers were competing to appear on that keyword. Who is in the auction and how much are they bidding?