but if you're targeting content farms then there is a far better way of doing it: by looking at the content.
I think there is an easy way for Google to determine a low-quality content farm. Look at the outbound links. If there are a lot of low quality out-bound links, it is a low-quality content farm.
But I am just speculating here. I doubt Google would demote sites that have Adsense on them.
Also, is there a formula for ads above the fold? What percentage of space? Computers don't just "look" at a website and say, this is quality. There are quantitative factors involved. I bet Matt would answer that question - why keep it a secret? The goal is to improve the content out there.