Hiya Lee,
In answer to 1 and 2:
My guidance would be to have a play but set a small daily budget until you've got the hang of it. Its amazing how quickly you can get 500,000 impressions delivered, and at (for example) 50p CPM you've just blown 250 quid.
Ive had mixed success with it - some losses and some nicely profitable campaigns. My experience is it works as a pricing model for some sectors but not others. I also found the CTR's very different to keyword targetted campaigns. My suspicion is the big G's system sticks site targetted ads into units where it will earn more than keyword targetted ads - so primarily below the fold. I'd certainly give it a go though if you can afford to throw away a few quid to test the water.
As for 3) I dont see this being any different to keyword campaigns. So if you PPC on keywords then why not on site target?
HTH
Chris
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