This is being painted as a scandal, but I think it should also be pointed out that when it happened it was heralded in the state as a great thing and an example of Palin's tough management style.

I'm an Alaskan, so I'll tell you the story as a casual observer in Alaska would probably tell it:

Mat Maid is a local dairy operated in Anchorage and getting it's dairy from the valley.  It's an important part of the local economy.

The Dairy Board suddenly announced that the dairy was going to close.  Despite operating for years they said it just wasn't feasible.  The announcement was sudden, shocking and done in a seemingly (and frustrating) matter of fact manner.

The new Governor asked a simple question: why? and, what had been done to try to save the dairy?

She proposed to the board a set of state grants that could be used to save the dairy.  Maybe together they could work something out?

The board said no.

She asked the board what the state could do, how they could help an important part of an agricultural economy that many people in the state think is crucial.  

The board said nothing.

Refusing to believe this was an unsolvable problem the young female Governor set up a meeting to tour the dairy with the board and discuss the issue in person.

No one on the board showed up.

(Note: there was some dispute about whether the meeting was scheduled or impromptu and if the board had notice of it, but I am presenting public perception)

That's right.  The new, young, female governor who had pissed off the state establishment by ousting a corrupt Republican in a primary was stood up by the dairy board.  It was exactly the sort of thing Palin detractors said would happen: she can't run the state because no one will take her seriously.

The Governor can't fire the dairy board, only the Agriculture board can.

So Governor Palin fired the entire Agriculture Board, appointed a bunch of her friends and they proceeded to fire the Dairy Board.

THIS WAS HERALDED AS GENIUS.

The fact that the board members were all local cronies of hers was easily dismissed as necessity since the appointments were done in such haste.

They got to work in saving the dairy.  Trying to put together a plan and make government work for the people.

sure, the plan ultimately failed but at she didn't just sit around and let that bunch of bureaucrats do nothing and let the dairy fail.  if she had been in charge the whole time maybe a plan would have been implemented sooner.

It should be noted that these events took place right before Palin was heralded as the most popular governor in the country and her approval approached 90%.

BOTTOM LINE:

Palin was a female Governor who ousted an entrenched Republican politician in a primary.  During her campaign the sexism was overt from all sides.  Alaskans were told the would be a bad Governor because she would none of the entrenched power entities in the state would work with her.

Basically we were told that she wouldn't work because she wasn't a part of the good ol boys network.

The Mat Maid 'scandal' was her first encounter with this network and she kicked their ass!  Frankly, it was pretty freaking sweet.  These jerks on the dairy board set out to embarrass her and were completely dismissive and she fired their asses and told the whole state who is charge.

As for her 'cronies' being the ones who financially benefited in the end .  . . well, Alaska is a small state, and Alaska's agriculture community is even smaller.  I don't think there is anyone in the state who could have been in a position to purchase these assets and not be a 'crony' of Palin, but maybe I'm wrong.

Anyway, just thought I'd bring the perspective from the ground.  We should be careful here.