Lots of problems here. First, his apps are Live Wallpapers, and he only shows ads on the preferences screen. Second, his sample is only ~500 installs and 600 impressions!
AdMob isn't killing it for me, but is a lot better than the OP portends. Here's my stats so far today:
Agreed, small sample. However ads on the preferences screen of live wallpapers is common practise. Don't see why the results can't be extrapolated unless amount of requests effects inventory served. I'm new to ads - is this true?
First, in this case, sample is so small that noise dominates.
On your main questions, yes, established apps with known average-beating clickthrough and (where possible) targeted demographics are matched to higher-paying-per-click lower-volume advertisers.
This is done to optimize total revenue through the network, and to avoid showing all the impressions of a high-paying advertiser on a junky "back page" that has low CTR and low spend.
Now, if you are a "brand" advertiser who values impressions and not clicks, you might be happy on the free back page.
AdMob isn't killing it for me, but is a lot better than the OP portends. Here's my stats so far today:
http://i.imgur.com/CNJb1.png
FWIW: 25k installs, ~38% active, 1.7 MM impressions to date (2 months).