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I guess it depends on how you read their TOS. Brian Carr told me once that they do not allow any type of paid traffic, including AdWords. I can't see where it is strictly forbidden as I read the TOS, though. I do know that they have tried various things with domains that they own themselves (BuyDomains).
The thing people should really think about is how much more money we would be making if Google/Yahoo and PPC companies could eliminate the millions a month in fraudulent earnings. Think about it.
Judging by the amount of "XY-disabled-my-account"-threads, a lot of resources are wasted because of these guys, and we see only the tip of the iceberg.