I’m sorry to hear you had a bad experience. I’ve never wanted ads on my blog because I was never very convinced that it was worth the revenue with a personal blog. I also appreciate simple, clean, Web2.0-y design. So I sympathize with your concerns.
Really though, I think the problems will be ironed out once Google gets the metrics right. Even a company as great as Google has been cannot avoid being associated with the often ham-fisted way technology companies in general misunderstand modern Christianity. They don’t know the code words, the handshakes, the oral law. So they think that by mining datasets and crunching other numbers, they can achieve a “good enough” analysis of what Christians want to buy. Not there yet, but I think we will be soon.

Adam @ pomomusings.com might be a good reference for you as he seems to have found a way through this.

If you are interested in having your blog generate some revenue in an acceptable manner, you could try two options:
1. Paypal Donations
2. Text Link Ads
The first option isn’t an advertisement, but it allows people who want to donate to you for your blogging to do so.
The second option allows companies, under a genre that you specify, to pitch advertisements to you; you must confirm which ones you would like to be presented, so you have total control over what is advertised on your site.

I’m bringing your post to the attention of our Christian friend who works on stuff like this at Google here in L.A.

Hi Scot – I had the same dilemma as you a while back and finally decided that if I was going to do ads on my site (for my school expenses) then I needed to have control over what gets advertised. Textlinkads.com was what i settled on because people rent out “space” for their link on your site every month and it’s up to you to approve (or disapprove) of that link before if ever goes on your site. Also, the nice thing about it is that they are just links, nothing flashy and don’t add to the clutter. In my opinion it’d really be worth you checking it out, if this is the route you choose to go.

You’d probably generate more just adding some amazon associate links.