Adwords is a pay per impression service. Whoever is willing to pay the most dollars in total will get the higher spots, CTR is irrelevant to what you will actually pay.
The higher CTR is (ie via invalid clicks), the lower CPC will go. For advertising on Google itself click fraud is a non issue in my view. All the data on CPC etc is there to make it look like a pay for performance service because people do not like being told it is based on impressions. Once upon a time it was probably based on clicks, but that would have been a very long time ago. For the content network I tend to think the loser is other people who are not clicking on their own ads rather than it costing advertisers. Advertisers bid lower because the traffic is lower quality (invalid clicks) and the good guys cop the lower payouts as well.
It is a bit like sites which charge for shipping versus those offering free shipping, people would prefer to $50 + free shipping versus $30 + $20 shipping. The guy paying $50 + free shipping would like to believe he is not paying for shipping. The reality is he is paying for shipping. It is all about "impressions". It has been packaged to make it more palatable for most people.
Regarding making money from adwords if it works you have a good site & campaign. If it does work then either
1. Your site blows, or
2. You ad writing skills blow, or
3. Both of the above.