There's a rule in Presidential campaigns: don't let your Presidential candidate get caught in a battle with their VP candidate or other surrogate. It diminishes your candidate by putting them on a social level with the surrogate - and by implication elevates their Presidential candidate. As a result, surrogates active try to engage the opponent's Presidential candidate by taunt them, trying to get them to respond to trigger a cycle of media exposure placing the surrogate and the candidate against each other.
The thing is, Palin is absolutely irresistible to the media both in the same way that Obama is - a fresh, energetic and telegenic new face - and in a different way - she's got so much for them to dig at, ideologically she's a big red cape that they can't ignore. Even if she was just being political and couching things is careful language, she's clearly used Alaskan conservatives for her political ascendance, and they're fully behind her and excited by her - and revealing that she went to a pentecostal church for most of her life will not turn them against her.
The media and their audiences are really bored with McCain and Biden - they've been examined inside and out over decades - so it's inevitable that they'll be constantly comparing Palin with Obama instead of Biden.
This does the job of Republican surrogates for them. This is one reason McCain's choosing her was a brilliant masterstroke.
Another, is that the digging at Palin by the media is sure to annoy the Republican base - and the Republican base remembers, even if the vocal Democrats don't, that McCain has been vocal against pollution, Big Oil, and Religion as Politics, and in favor of federal funding for foetal stem cell research, for immigration normalization, environmental controls, and so forth. They remember that he was for Roe v. Wade before he was against it.
No way were they going to get psyched about McCain for President. But Palin for VP? That's reason to get out and work hard. Even if the fact of the matter is that VPs don't actually have to do much other than cast an occasional deciding vote in the Senate and wait for the President to have some bad sushi.
Meanwhile, McCain can go back to the stuff that excites him (and is much more interesting to the undecided moderates) without having to worry about playing half-hearted appeasement games with the far right.
It's brilliant, and if he wins a big part of the victory will be because he chose Palin, and Obama was audacious
(1b. "recklessly bold") enough to not choose Hillary Clinton.