Since March, we have been reporting about some Google AdWords ads that appear to be displaying above the 25 character title limit. Back in March, I was told by Google that this is a bug, but Google was wrong. At the end of March, I probed Google about this again and Google confirmed, that in some cases, the AdWords title may exceed the 25 title character limit.
There are many issues with using dynamic keyword insertion. Specifically the ad simply might not work all the time, plus the title might not always match the ad description, amongst other issues. But it is worth testing this out to see if it leads to any increase in your click through rate and, ultimately, quality score.
Forum discussion at WebmasterWorld.