incrediBILL - 10:28 pm on Apr 22, 2011 (gmt 0)

Arbitrage ? ..I always understood "arbitrage" to mean PPC ( adwords or other ad buys ) leading to PPC ( ads on landing site or aff links ) and site existing only to act as click through to get click revenue.

That's a bit narrow definition IMO as arbitrage is technically just a risk-free profit transaction at zero cost. Obviously when you start using AdWords it isn't zero cost, but if the cost is low enough it's relatively risk free, which makes affiliates fit the definition.

[adwords.google.com...]

Arbitrage What's the policy? Google AdWords prohibits websites that are designed for the sole or primary purpose of showing ads. Examples of prohibited websites: * Interstitials on pages that lead to pages of ads or sponsored offers * Websites whose sole or primary purpose is for users to click on ads that redirect to other sites Examples of acceptable websites: * Websites that have more content than ads

Affiliates ads are still ads, they redirect to other sites, it's pretty clear, the OP has a valid reason to be nervous IMO.