The hotel lived up to expectations. It still doesn't match the Wynn, but it's a good place to stay if you can find a deal.
Room: Large and comfortable. Every room is a suite; bedroom area connected to a sunken living room. Tipping $20 to check-in clerk led to an upper floor strip view. Unfortunately the "strip view" at the Palazzo isn't the best. More than likely you'll just be facing TI. The view of the mountains in the distance was nice. Having an upper floor was nice though, and definitely worth the extra $20 (tip).
Casino: We didn't end up gambling here much due to higher table minimums, but it does seem smaller than most on the strip (not that that's bad necessarily). We did walk through often though, and it's a nice casino. Fresh and clean. Didn't smell like smoke, like many casinos do.
Overall, I'd stay here again if the price/deal was good enough. For the "normal" price though, the Wynn is better.