(This started off as a long comment in a little read diary: I thought it was substantive enough to be worth of separate publication.)
The GOP is run by rich folks, and basically looks after their class interests; low taxes, no estate taxes, helping out business. However, there are not enough rich folks to elect a president, even if you count the toadies, the hangers-on, the wanna-bes and the folks who think they're rich but aren't. So the party has to use the religious right as its actual voters, and this group includes a fair number of folks who AREN'T rich.
To gather this group in, the GOP promises, but doesn't deliver, a return to a simpler age where abortion was done in back allies, gays were closeted family men who could be thrown in jail and the black folks and the Jews knew their place. It's been a 30-year exercise in stringing these folks along. The rich people who pay for the party have neither interest in making good nor incentive; once abortion is made nationally illegal a lot of the religious right probably won't bother turning up to vote.
The problem is that the rich folks who run the party - and run Fox News - aren't really sincere about the party's social agenda. It's just red meat for the rightwing workies. The rich - really, the country's owners - want the party to look after their class interests, which are all economic. They don't trust the petit bourgeois footsoldiers any more than you or I do.
The problem is that the crazies are getting restless, and want to run the party themselves, not just provide the voting muscle. This makes the richies nervous: you see this with the complete lack of rich-folks funding for Huckabee (who incidentally wasn't reliable on economic issues as far as the rich were concerned).
Palin also scares them, as she's drawn from the same group, but seems even more ignorant and likely to blow up the world in search of the the end of the world and the second coming. Even short of that, she seems ignorant and incompetent enough to fuck things up even more royally than the most recent occupant of the White House did, given the chance. She'd further tarnish the brand, and probably cause everyone's portfolios to blow up. And the people who run the party aren't fools, just dedicated to their own interests: they realize that she's incredibly ignorant, and probably dangerous beyond a point they're willing to tolerate.
Much safer to destroy her NOW than to let her build herself up and run in 2012, where she MIGHT win the nomination because of her attraction to the smalltown and southern white folks who actually provide the votes. She's attractive and hits all the right-wing sweet spots. She seems one of the people. The rich do NOT want a choice between her and Obama; they want someone sincere on the economic rightwingness but insincere on the rest. Fox, being the instrument of the rich folks who run the party, is the chosen means to have at her when she's vulnerable.
(Obligatory rec list update: Thanks very much!)