It's not necessarily quite that bad. The list can be made modular.

One option would be to start of with a list of the top 500 sites and then determine from that information what demographic the user fits it. Then you could load a list of sites pertaining to that demographic and further narrow down the user's behavior.

Also, if you're talking about ads on a certain site, the publisher can make a list of the sites in their niche and then you could load that list and move on from there.

All in all, this has some very interesting potential. The question is, why hasn't Google done it already?