foxtunes - 5:54 am on Jul 18, 2005 (gmt 0)

".....Is the idea to place an image ad or to have 4 images above 4 text links in a 728x90 leaderboard?..."

The latter. The 4 images make the ads look like captions, also the images at the top of the page, drop the leaderboard (borderless) right into the hotspot boosting ctr. It's a lot more effective (in terms of ctr) than just having a 728x90 leaderboard at the top of your page.

".....The ads lined up so neatly that it looked as though the pictures were part of the Adsense ads. I had to roll my mouse over the pictures to figure out that they came from another service. Legal? Illegal?...."

It's a real gray area. I think the idea though is just to get folks to see the ads, after that isn't it up to adsense targetting, and visitor preference whether anyone clicks?

But could this be construed as drawing "undue attention to the ads"? In my opinion no more than placing two borderless large rectangles right in the center of your page.