It goes to show at least two things: 1) All the conservative “Family values” in the world can’t reverse the social and economic changes that have brought nontraditional families like Palin’s into existence; and 2) Identity is a fluid, flexible thing.
Obama has fought hard to avoid becoming the “African-American” candidate, in part by stressing his multicultural heritage; in contrast, when Hillary Clinton started positioning herself as the “women’s candidate,” her campaign nosedived--I'm not sure if the appeal to identity politics was a symptom or a cause of her campaign's demise, but there's definitely a relationship between the two facts.
Both campaigns represent a step forward for African-Americans and women, but one of the measures of their respective successes is the degree to which they appeal to multiple constituencies. Not only that, but the degree to which their respective constituencies feel free to disagree with the candidates and support other candidates. It's diversity, not unity, that represents progress.
In nominating Palin, Republicans are playing a slippery game of identity politics, not one that they are good at. For that very reason, I’m glad they picked her. Her candidacy isn’t just another step forward for women; it’s also a way of highlighting the dominance of nontraditional families in America today. If the Republican Party can survive the ideological contradictions represented by Palin's family, I think America will be a better place.
A clarification: It occurs to me that that last line could be misread. Ideological contradictions--namely, in this case, the conflict between the Republican Party's rhetoric on the family and the reality of actual Republican families--could destroy the Republican Party, and that would be fine with me. What I mean is this (quoting myself, from the comments below): we can best measure our progress as a society by what's happening in its most reactionary corners. There will always be people resisting social change--voting Republican is just one way to do that--but it's instructive to see what changes they are resisting. From that perspective, Palin's pick shows how far we've come. The thresholds are moving in a good direction.