The conventional wisdom these days
is that Palin was not McCain's pick. He was leaning towards Ridge or Lieberman and the RNC basically told him that if he didn't play along, their financing of his bankrupt campaign would dry up. Palin was chosen because she could be manipulated if McCain got in, died, and she ended up with power.
I think they were stunned though at how unsellable she became. On some days she makes W look like a rocket scientist.
Art