It's not even worth arguing over whether or not Palmer or Manning was the better acquisition; clearly Manning was. First... because Indy released him, we didn't have to give the Colts any compensation whatsoever (as opposed to the 2 high draft picks Oakland gave to Cincy for the mediocre-at-best Palmer). Secondly, the level of play from the 2 QBs isn't even close to comparable. Manning's elite; Palmer is not and never has been.
It's a no-brainer, Fight On... any time you can acquire a player who's among the best who ever played at his position, then you do it. Especially if there's no compensation to his former team. But then, even if we had needed to give up a first and a second (or even more), Manning would have been worth it; playing (as he is) well enough to be an early favorite for league MVP honors.