Well written. I more or less agree. But I will pick on a few points.

Who uses these ad platforms successfully?
“Companies that make novelty t-shirts, get-rich-quick schemes, and dating sites are buying users.”

I would be cautious reading in to that very much. Early on, Adwords was infested with ebooks, get rich quick schemes & whatever else you can put in a sales letter. If you read something like Perry Marshal (early adwords guru) the basic principles (eg, measure & optimise for ROI) are solid, but the context is seedy. The people willing to 'create a virtual product' in response to the availability of cheap & effective advertising & work a business model where >50% of revenue goes to advertising are sort of pioneers.

As Adwords grew, the infrastructure of consultants targeting normal companies & employees with knowledge & managers with confidence was built up. They usurped the MLM ebooks. Google encouraged this because crappy advertisers have a feedback effect on CTR (& eCPM). These days a lot of the $5 CPC bills are picked up by electricians & gardeners.

“What compels someone, who clearly has little or no interest in a product, to click a highly descriptive ad for it and then not purhcase? “

I think part of the answer to this is CTR. Once it goes under a certain amount, you are picking up a lot of outlier cases. Once in a blue moon, I might hit an ad for refinancing (I don't own) or a dog bowl (no dog). Not very often, but when I do it is absolutely no indication of my intentions. Sometimes I click things by accident, especially when I use a different browser (especially Opera for whatever reason). Again not often, but over a year, it'd add up. I guess that in addition ti this, you have outlier people. Once your CTR is low enough (maybe <0.1%), these random clicks become substantial.

This doesn't explain the difference between one ad location & another. But it does explain a correlation between CTR & conversion rate. Maybe.