Google Ignoring Geotargeting when city is in query?

Hello everyone, I am seeing this result in Google

PPC results for Houston

Interesting stuff, while I am in Philly, if I type into Google “Corporate Catering Houston” notice how many of my results appear to be local paid ads with the Houston Tx or actual location like 14529 Memorial Dr, Houston, TX or 2711 Kipling St, Houston, TX.

Has anyone else seen this?

Typically I would think, hey…if I geotarget an ad to someone in Houston, I really don’t want it showing to someone in Philly! This time I am kinda OK with it, for a very simple reason… assuming that I only type in things I am actually LOOKING for then it is ok to show a geotargeted ad to someone out of my geotarget. But only IF they include a city in their search, do you agree/disagree?

The time when I get upset is when Google will show related ads on a second search for something I didn’t search for at that time, see the examples below when I searched for Germany vacations and instead was shown vacations for Mediterranean Vacations and Mexico Vacations!!! because I had searched for them before:

Germany vacations result in Google

or when I search for “sell rubies” and am shown ads for selling platinum!
Sell rubies

Again…this I don’t like, because as an advertiser I could pay for clicks for someone who is not REALLY interested at that time. I am comfortable assuming that someone will search for what they want, no need to show results that I could be paying for on un-related queries.