Ok, since I'm being called out here and I think I have already answered this like 200 times, what's one more time to make Acroplex happy and what happened to your Moderator tag, seriously, I thought you were doing a good job.
Yahoo's discounting system is based on idea that everybody has a TQ/Traffic Quality Score and based on this score the price of a click will be discounted for the advertiser.
The TQ score itself is taken from the average conversion rate on Yahoo.com based on a category for every keyword. So the "real estate" keywords may convert at 1 in 200 on Yahoo.com. This means that for your portfolio your "real estate" domains would have to convert better than 1 in 200 to be a 10. I do not know what the graduated scale is from 10 to a 1. The TQ is only based on clicks and conversions to the advertiser, nothing else. It is also currently based in certain countries, not all countries.
As far as the discounting goes in 2007 if you had a TQ of 5 and a click was $1.00, the advertiser still normally paid around $0.90. But in 2008 it seems like they are paying about $0.70. So they have really picked up the discounting recently.
Yahoo has not provided us with a book, manual, or any documentation on how this works, it's just from talking with them on the phone, in person, or just figuring it out on our own. Hopefully they will one day soon.
I hope this explains some things.
Donny