Heheh.
One thing worth noting is that the first advertising product was based on a CPM (Cost per Thousand Impressions) pricing model, and that the CPC component was added, with AdWords Select, in early 2002. (See the timeline linked-to by edit_g.)
AdWords Select then evolved to become the AdWords we know and love (at least some of us!) today. ;)
So, you were quite right, Nikke - in the sense that an essential change occured in early 2002.
AWA