This is a short one, but I like to keep things to the point as much as possible.
There's been a lot of talk about McCain's VP pick being a "desperation move," or even a "Hail Mary," a last-ditch attempt to pull a win out of Rove's (or Diebold's) arse. Living on Planet Georgia, where the pod people took over 20 years ago, I have a little different perspective under the jump.
McCain's biggest problem has been enthusiasm. Obama's supporters are largely enthusiastic about their guy; the best the other side has to say about McCain is that he's not a Democrat. There has been a lot of talk about how Lieberman or Ridge would finish off the Pharisee vote for this year — not that it's likely they'd pull the lever for Obama, but they would simply stay home and let the goplets sink.
I'm sure McCain himself, and certainly his handlers, can look at the electoral college layout and see that he's not going to win the election. He's down by 9 points with two seconds on the clock; even if the Hail Mary connects and they get the two-point conversion, he'd come up short. But - the presidential race isn't the only thing on the ballot this year (duh). Many a front pager and diarist have talked about a possible Democratic wave this November, in which the good guys pick up 5 or more Senate seats and a dozen or more in the House. If the Pharisees, the secondary base, were to stay home this November, the pickup could be even bigger.
So this is the calculus as I see it: McCain isn't going to win, barring something huge happening in the next two months. Playing to win (i.e. by running to the middle) is only going to dig the hole deeper; they'd lose more of their pre-programmed Pharisee voters than they would gain independents or Hillary Hold-Outs and the congressional gains would be (to them) catastrophic. By running to the right and picking Palin, the GOP shores up their wavering secondary base and maybe keeps a handful of Senate/House seats that they would have lost otherwise. Maybe some state legislatures stay in goplet hands as well.
In war, an overmatched army will fall back to positions they can defend better. I think that's what's happening here.