Unless it is a very uncommon term it shouldn't hurt that much.
Not everyone is doing it and all AdWords advertisers should refrain from doing it to others even once!
If you want to see where the ad takes you then view the source to get the redirect url or copy the url in the ad and paste it in a new browser. I use a toolbar that removes the redirect through Google and takes me to the landing page directly.
No matter what your preference is...don't click the ads...it's just not right to do even if it is your competitor!
But I do agree that more comunication from Google in a proactive way would be nice.