Project Wonderful (http://www.projectwonderful.com/ ) already does a lot of what you've suggested. Advertisers choose sites, bid on them, and site hosts can approve ads individually so they always get relevant, unoffensive content.
But you're right, there's no reason they couldn't expand this sort of model to allow site hosts to pick ads as well.
That's a pretty cool ad service... I've seen ads run by them, but I never knew what they did differently. Looks nearly ideal (unless you only have one bidder).
But you're right, there's no reason they couldn't expand this sort of model to allow site hosts to pick ads as well.