I first learned of the Dynamic Keyword Insertion AdWords trick at the Ad Copy & Landing Page Clinic during SES NYC 2004 and then I got a refresher in both August 2004 and December 2004, the best description I have is from August.
The "bracket trick", which she told the audience in NY. (1) {KeyWord:Long Beach} = All words with initial caps (2) {Keyword:Long beach} = First word capitalized (3) {keyword:long beach} = All words in lower case. This allows you to dynamically put the keyword the searcher used in the engine in the title of your ad with these brackets "{keyword}".
A thread at Search Engine Watch Forums discusses some odd behavior with this trick. One member reports that "In each of these ad groups, 90-100% of the keywords are now inactive, and the new minimum CPC's are 200%-1000% higher than our previous bid prices." He believes it has to do with the new AdWords Pricing Changes.
But Andrew Goodman reports, "I am using dynamic keyword insertion widely and am not seeing low quality scores as a result. I have seen no change in pattern on that front." AussieWebmaster warns that the title area is very short and if the query is long and followed by a brand name, it can get cut off and look weird. So be careful when using it.
The past four out of five entries posted here (including this one) have been about the PPC area within search marketing.