Technically URLs are case sensite outside of the host part. [the host part is case insensive - DNS is just as well]
So http://www.example.com/index.html and http://www.example.com/iNdex.html are two completely different URLs. As far as the world is concerned: they've got nothing to do with one another unless your system links them together to deliver the same content.
"bad content": does not need to violate any ToS. There are a number of words or sentences that have meaning in other languages, in slang, ... that all result in no ads being shown once Google knows they are on your page. Google will not tell us the entire list for obvious reasons (the scammers would love it way too much, would change every so often, ...)