I get 404s because in some cases given spider fails to load a link to my site, and I clearly see my own AdWords variable there or GCLID.
And, if we opt for search only, where those spiders find pages with our ads that should be triggered by search query only?
If you are noticing abnormal click activity you should simply report it to Google and they have ways to review the activity.
If you opt for Google search only your ads will only display on Google.com. Your ads will not appear on their partner sites. Becareful running on Google search only unless you are 100% sure you don't want traffic from their partners. While some bad partners may exist (you can still block sites individually), blocking partners like ask, aol, and ATT amongst several others will decrease your reach considerably. Here are some partners they will share with you, but the majority have NDA's and Google won't release the details.
View partner list here -
[adwords.google.com...]