Re: competing ads
It depends on your Campaign settings. There are four different methods controlling how your Ads are shown within each group and they break down into two pairs of "showing your Ads evenly" and "showing the best Ads more often". The actual terms and settings are described in the help file below:
From your description of your results it sounds very much as though your Campaign Settings are either "Optimise for Clicks" of "Optimise for Conversions", rather than either of the rotating settings.