From Google's January 2005 Google AdWords service announcement:
Affiliates or advertisers using unique URLs in their ads will not be affected by this change. Please note that your Display URL must match the URL of your landing page, and you may not simply frame another site.
Redirects are covered within the point about framing the advertiser site.
I see loads of Adwords ads that display the original merchants URL (@pple.com, d@ll.com, etc) but just have an affiliate link for destination url. Surely against TOS but G just leaves them.
These are compliant with the TOS. However, they invoke the "affiliate rule". Only one ad with the same merchant's URL will be displayed on a given page.
This tends to make these ads more costly. In the case of affiliates with high name recognition, it generally forces you to bid for the top spot. Otherwise, you won't be displayed.