Purchasing AdWords and optimizing it is a science in and of itself. goodkeywords.com provides a useful tool for researching different potential key words. Then you can use G's sandbox or the Overture key word pricing to project ROI. You want to shoot for at least a 1% conversion rate on the AdWords advertising.
I have been out of this area for a couple months, but send me an e-mail if you have other general questions. Maybe I can help out.
Personally, if I ever pay Google, I'd want my ads to show up on google.com only (something they discourage you to do) but I'd be glad to be wrong.
I'm confused by the phrase "having issues with their money "wasted" (I'm quoting) on AdSense placement (ads showing up on other people's websites, where people are not clicking on them as much or not at all)".
You pay for the click (or VERY little for views-- CPM). What people SHOULD be concerned about is the higher rate of click fraud on adsense ads (publishers have a vested interest in getting people to click on their ads). They should also be concerned about the gray area of "ad confusion" - designing an adsense site in such a way that the ads seem less like ads and more like normal site navigation.
I'd avoid the Adsense publishing network altogether.