Don't know where you got your info, but a lot of your information is either flat out wrong or taken out of context. Following search engine optimization and PPC search advertising (a la Google AdWords and Overture) is a major part of my job so I'm well versed on this:
1) Yes, Yahoo DID switch away from Google. As has been stated, this isn't really a bad thing as Google is not what it once was and the new Yahoo engine (heavily based on a refined Inktomi engine but built totally new from the ground up) is on par with Google according to most reviews. It'll be interesting to see what impact (if any) this has on Google's IPO as most people have been unaware that other engines (Teoma, FAST, Inktomi) have steadily gained ground on Google and are now on equal footing in terms of overall relevancy. Now that a high profile player like Yahoo is using a different engine yet hasn't seen a mass exodus of users since the switch from Google a couple weeks ago (as some predicted) I wonder if investors will notice that the main asset of Google is no longer quite as unique as most thought.
2) No, the first page of Yahoo search results will not be littered with advertisements in the pure search results. Yes, there WILL be some advertisements in the 'Sponsor Results' section for many queries. But that section is clearly delineated above the main results just like the Google AdWords results are separated from the main Google results. Those results have been that way for over a year now and both Google and Yahoo are mindful of keeping those search ads distinguised from the main results.
3) The 'advertisements' or 'commercial' sites you're most likely referring to in the main results will NOT be guaranteed a spot high up in the rankings. Inktomi DOES offer a paid inclusion program wherein a site can pay an annual fee to have specific pages of their site spidered on a very regular basis (usually every 48-72 hours.) The new Yahoo engine will be incorporating a similar program although I don't think the specific details are out yet. Google does not offer a program like this so sites simply have to rely on Google's perception of the 'freshness' or 'importance' of their site's content and hope that they will be spidered regularly; Google does a major crawl about once monthly and will hit major news/information sites as much as several times a day. There is also no guarantee that Google will deep crawl all the pages of your site. It may just grab a handful of pages. Yahoo's paid inclusion program allows sites that are willing to pay the fee a chance to have specific pages deep within their site indexed. There's a lot of debate on whether this is a good or bad thing on how it will affect the 'quality' of results. But regardless of that debate, paying the fee does NOT guarantee that your site will show up in the top results for certain queries. It merely guarantees that your site will be in the index (although by default, being included in the index gives you at least a chance of being found; you'd never be found if your page with relevant content wasn't indexed.)
Also, Yahoo will still continue to offer inclusion in their human-compiled directory (the original building block of Yahoo, but no longer quite as important as it once was) for an ongoing annual fee. Depending upon how Yahoo tweaks their algorithm these results might find their way into the organic search results depending on the query. Note, this is not much different than Google's usage of Open Directory results in their main results. The only difference is Yahoo's directory costs money (and has for years) whereas the Open Directory is free (and has a turnaround time that corroborates that - we've had submissions take over a year before they're included; sometimes you just never hear back at all.)
I'm not a Yahoo fanboy or anything. I just work closely in this field and am glad to see a little diversity and competition to Google.
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