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The featured listing is based on the 'competitive rates' in AdWords at the time you set up. (it wasn't clearly explained if that's based on the actual cost the top spot is paying w/ the CTR figured in, or if it's just on the max bid amount). The possible advantage though, is that once you lock in, you don't have to get into bidding games at all, your CPC is steady. If the competition on your term goes south, obviously you are a bit out of luck as you are paying more than you could/should.
They offer another spot too, above all the listings. It allows you to display a logo or picture and up to 6 (I think) links into various points on your site. This also provides a pretty decent chunk of page real estate. That is sold on a CPM basis.