I think its fine, but I would not over do it. I prefer to make money off of sponsors advertising on my blog. Adsense usually is good to pay for hosting and any other costs, but unless you ads are really well placed and targeted and you have a ton of traffic you wont make crazy money. Plus you lose visitors when they click the ads usually.
If you want ads in the content area either put them above the very first post or at the end. I have one link unit at the top of my site and one big image ad in my sidebar. Then I have a store section with links to affiliate products and spots for banners.
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