Hi martinibuster. Your post just throws up more things that I did not know about adwords. It has always seemed to me that if I up my maximum cost per click I go up a position or two and that I thought was all there was to it. The trouble has been that my competitors have also done the same and now we are all paying more for the same thing we used to pay less for!
One of my issues at the moment is the high number of bounces on adwords visitors, I have to focus the campaign a lot more I think, anyhow that can probably not hurt. And I am thinking of switching off appearance in adsense sites altogether as I don't expect we are getting quality clickthroughs that way.
But the thrust of your post, if adwords results are as useful to searchers as natural listings are, then natural listings may be doomed. I am sure Google used to promote its natural listings as being the jewel in their crown, it seems the dollar signs have consigned that to the bin of history.