Finally caught up with Yahoo! PR folks — Gaude Paez in this case. She helped clarify for me that the new Yahoo! Publisher Network isn't just about blogs; it's for any small or medium-sized content publisher (right now by invitation only — John Battelle has them running on his site: scroll, lower right).
Gaude told me the largely automated system could accomodate sites from small blogs to the Christian Science Monitor. Larger, high-traffic sites such as CNN require more hands-on management and so are not part of the contemplated market for the product.
It's squarely competitive with Google's AdSense, which has long enjoyed dominance in the contextual advertising world. Newspaper sites in particular promise to be a highly competitive battleground for contextual-ad distribution going forward.