I think it is a perfectly good way to advertise, but only on free hosts. Sorry, but people ignore ads and use freehosts, but dont support them. The webmaster only looks out for #1, so the free host must look out for itself.
...and your right, if you pay for hosting, then by rights the host cant touch your content. If you are hosting for free, then that is a different story. The general opinion is that if you want no ads that arent your own, dont use a free host. The TOS of any freehost allows it the rights to place any ads on your site using any method. If this means linking to your "words", then that's what will happen. The free host has a right to self preservation. If all current ad method dont work, then they can resort to a new method, regardless if anyone likes it or not.
And before anyone says they wouldnt use a service like that....for every person that says they wouldnt, there are a thousand more who would. Free hosting is mostly for newbies, hobby, or personal sites anyway. Myself, I ignore those who say they wouldnt use my hosting because it doesnt matter. I have more members than I want now anyway. Funny part of that is I have had people actually threaten to take their business elsewhere. Ok, go ahead

(what business? it's free! LOL)