In Danny’s blog post about the new Google Suggest beta he mentions a similar type of query refinement tool available from AOL’s new Pinpoint Shopping.
It’s also worth mentioning that Surfwax has offered a dynamic query refinement tool called “LookAhead” for almost a year. It’s available with their news search database and offers search-terms based on a controlled vocabulary.
Google trounces Yahoo and Bing when it comes to ad impressions and CTR, but the numbers are much closer than they were three years ago. Less competition - and lower CPC - is definitely a factor.