Peter - you are right about it being difficult to corner the market for popular search terms on the google 'web' results.
But this is not the case on google 'Image' results. e.g. look at the following searches and you should see my images come fairly near the top of the search results (the ones with ni-photos.jmcwd.com under them):-
labrador - Google Image Search
ireland - Google Image Search
irish desktop backgrounds - Google Image Search
Bearing in mind the official email from google - I am not allowed to say how many page views etc I get through the above sort of searches but it the vast majority of my traffic - and a significant amount..
NB - I currently have something like 70 pages that have adsense on them, and around 580 photos that are free to download and hot link to.
I have also dabbled with various other affiliate stuff including azoogle, auction ads, calendars.com and a few others - and I have found that at least for my type of web sites - NOTHING comes close to what I can earn with adsense..
Earnings From Adsense (In US Dollars):-
May 2006 - 10
Jun 2006 - 40
Jul 2006 - 57
Aug 2006 - 59
Sep 2006 - 58
Oct 2006 - 121
Nov 2006 - 161
Dec 2006 - 157
Jan 2007 - 215
Feb 2007 - 271
Mar 2007 - 377
Apr 2007 - 375
May 2007 - 525
You should note that I put a LOT of work into taking, categorising, naming, and uploading a LOT of photos a long way prior to May 2006 before starting to try and make money from Adsense.
So it is not like you can upload a few photos and get good earnings the next week.
NB - I have also found that when I do upload new photos - it can take 3 months or more before they are picked up by google images.
All my photos are 1024x768 in resolution which makes them acceptable for use as myspace backgrounds / desktop backgrounds by the majority of people. (Bear in mind that about 99% of my visitors have no clue about resolution - so will not be put off by the fact that their monitor is actually 1280x1024 or 1280x800).
Other things to bear in mind when doing this sort of thing:-
You need a host that provides with a LOT of bandwidth - I am with register1.net which currently allows 200GB / month with their VDS pro account.
If you want people to actually look at your page when searching from google images - you need to mess around with .htaccess so that when they click on the link for 'full size image' they are redirected to a similar picture with text asking them to visit the site for a version without the text e.g. :-
http://www.jmcwd.com/redirected-images/sky.jpg
Total amount spent so far:-
Domain name reservations, and hosting account for 3 years = approx $800
Paint Shop Pro 8, + Upgrade to PSP X = approx $90
Namo Web Editor = approx $90
NB I dont recommend Namo at all - you can achieve the same results for free with PSPAD and FileZilla - but please make donations if you use them.
Fuji s9500/s9000 Camera + filters, memory etc = approx $900
NB - you can now buy the new version - the S9600/s9100 which is even better for approx $520 - which I DO recommend..
Total Outlay = Approx $2000
Errr.. now I add it up - that is a lot more than I had thought... But hey - I would have got the camera anyway regardless if I ever did a web site or not...
OK - this post is getting a bit long now.