This whole palladium thing is actually the result of several motivating factors.
1st, MS has been the victim of 90+ percent of the Virus attacks in the PC (apple included) industry, and there is no way around it, short of an entire code base being re-written. Gates, doesnt want to do that (I guess 43 billion and a few years can't get it done

), and it has been shown time and again, that MS software will be vulnerable, in this scenario, they/he feels that the best way to prevent attacks is to stop them at the hardware level. Think of a read-only hard drive that had no mechanism to write data, you couldnt possibly corrupt the data from a remote location...this is the way they are thinking. Oh, and also, they can be lazy with thier security level in windows now that the CPU is controlling it all...
2nd, MS wants windows to be THE media delivery system for this generation. Think of all the money to be had from literally hundreds of millions of subscribers renting movies, music, etc all from windows, and MS gets a piece of every transaction...he beleives (perhaps correctly) that bringing iron-quality security to windows will make the media companies finally make the whole-hearted jump to support windows with thier full catalogs...especially if they can delete your files remotely!!
3rd, this HW security has a nice side effect with regards to linux...namely, that in order for linux to participate in this "new media and security ecosystem" it must be approved by a consrotium (possibly something like the MPAA) , e.g a company MUST PAY to have thier code, GNU derived or not, to be approved so that they can boot up in "secure mode"...bye bye free software...
4th, enterprises may love it because they can restrict information exchange at the HW level, I am also sure governments will like it too...after all, we as a free society should never be allowed to exchange information in a free and unencrypted manner. (sarcasm)
5th, control of the hardware, MS will never buy a PC company unless they have to. Apple is able to move at a quick pace because things are "more predictable" (notice I didn't say neccesrily more stable), MS wants this advantage too. By dictating the HW spec, MS can better "innovate" like apple does...what this means for OEMs if all thier products are fundamentaly the same (they almost all are already) is unknown except that you can glimpse it in the form of the Tablet PC, the guts are almost all identical, the only difference is the casing etc...
6th, and the final point is, securing windows as the platform and keeping it there. Many people cried and moaned about how MS smothered Netscape, and other similar companies like Real etc, and said MS was competeing against them unfairly...the truth is, it has nothing to do with those copanies per se, and everything to do with spreading dependency on windows centric technologies and services. Think about it. It doesnt matter if on linux you are free, when you cant
a)do any online banking because the web service is using Java/COM technology which is proprietary to the Windows VM, and the HTML code is written exclusively for windows.
b) you try to watch a CNN or similar online broadcast, but its only in WinMedia format, doesnt work,
c) the hardware you are runing on is "designed for windows" and the interface is closed and hidden so you cant utilize fully the PC you just bought unless its running windows
d)file formats in office will dictate who you can and cant do business with e.g everyone or noone and
e) your new MS smartphone and Pocket PC are only supported by windows...oops try to switch now!
...just example A is enough for 80+ percent of the consumer market to stick with windows. A few more resistant people may tolerate B, but I can guarentee you that A,B,C is enough for 90% to say no to alternatives...to say nothing about them all.
Trust me, unless there is some massive upheaval in public opinion, palladium will just sink in right under everyone's nose...
I just have to wonder myself though, what happens when an exploit or flaw is found at the HW level, say in the CPU where palladium will reside, how do you patch that!? I think that this could actually (think nightmare spyware) totaly screw anyone using this type of system; software is mutable, but HW? It'll be interesting/scary to say the least...