Yes.
> the problem with targeted advertising is the targeting
Is it? The problem with advertisement is the advertisement. I don't like to see ads at all, but one thing I know for sure, I'd take targeted ads at all time over random ads.
> People don't like seeing their web history funnel into their advertising.
No. This is the problem YOU have with it. Most of the non-tech people I know have no idea what you are even talking about.