In the dot-com boom, every startup figured it would make a killing by
bringing people to its site and charging advertisers for visitors' ad
views and clickthroughs. When the crash came, it sounded like these
profits never materialized.

But lately all of the big web company announcements -- blogger.com
purchased by google, boingboing.net wins bloggies, this or that
blogger went pro and quit his/her day job -- seem to deal with sites
whose immediate profitability is questionable, unless the ads that
accompany their pages are bringing in a lot more than they used to.

Did Google AdWords change this? Are targeted ads worth so much more
than the old, random ad banners that they have revitalized a dying
business model? How many pageviews does a site need per month to meet
the costs of reliable hosting (which I imagine costs around $30 per
month to be ready to handle large traffic, the first 5 or so GB of
traffic free, and then a market cost-per-GB afterwards -- is this at
all close to correct?)?

Are many of the most famous bloggers actually making money off their sites? 

There are many questions-within-questions here; I would appreciate as
nuanced a response as possible, sample numbers for real or
hypothetical content providers, and links to relevant information.

The short answer is yes - advertising is growing very rapidly and many
sites are making significant revenues. Contextual advertising did
change the market - many advertisers are paying several US$ just for
one click on an ad.

Lots of small personal sites are now making a few thousand US$ a
month, and in the last years many of the large internet properties
started making millions just from ads.

advertisers pay the website owners for hosting there products.. big bucks in that