I ran into this myself. I wanted to place the following ad on adwords to boost the visiblity of the site somewhat...
Susan's Place
Safe & Clean Transgender Support
with Chat, Forums, Links, and Wiki
www.susans.org
Google has the following to say about it.
Keyword Transsexual Inactive for search.
I contacted them about it they say it's their right to determine what keywords they wish to allow adwords on. I said I run a transsexual support site. They said the same thing. So, I said fine, you won't make any money from me then. Until they change the policy to allow non-pornographic use of the transsexual keyword then I will not do business with them. It's costing them at least 30$ per month. They will bend on this before I will so it's their choice.