jon,

Your first idea is a good one. Just make sure that it is also flexible. Personally I would only consider your solution if it also allowed a ppc model. I would also be more interested if it allowed me to do other ad formats like text ads, html ads, etc.

Your domain one would require a lot of integration with control panels/servers OS's. It can still be a good idea if you are able to implement it right though.

Good luck.