I agree. That's one thing Google figured out early on. It's much easier to not degrade the experience when you can match an ad to a query, because you can make sure that it appears relevant.
Exactly. I cannot think of any other use cases for ads where they would not cripple user experience but search. When I am looking for something you are most welcome to show me your suggestions. When I am chatting with my friends, o reading updates from Curiosity Rover—stay away.