While John McCain is technically the head of the GOP as its most recent presidential nominee, McCain really only leads the "moderate" wing, while the party is divided primarily into two factions: McCain's moderate wing (which supports massive government and doesn't care about religious issues) and Palin's right wing (which supports massive government and is obsessed with religious issues). There is no small-government wing save the much maligned libertarian wing led by (who else?) Ron Paul.
McCain is old news, so Palin stands to become dominant in her role of head of the right-wing faction which is probably more numerous than the centrist wing. This means come 2012, Palin will indeed be seen as the de facto leader of the party and especially as the leader of the religious right/culture warrior faction of the party.
Palin will become the leader of the American right-wing. Unless she has a major change of heart, Palin will stand for war, nationalism, the religious right, domestic spying, and massive government of every kind. Her followers will worshipfully follow her anywhere because they see her as the annointed middle-American savior who will lead the GOP to victory against the hordes of urban non-whites, immigrants, Ivory Tower America-haters, and atheists. She will be re-elected in 2010 as governor, and in 2012 will emerge as the front runner from the right-wing of the party.
Palin will fully employ her country-girl schtick and will rely on active support from evangelicals, rural Republicans, and pro-war factions of the party.
In short, it will resemble the primary of 2000 when George Bush emerged using a country-boy schtick and seized control of the right wing of the party.
In many ways Palin is just George W. Bush without the blue blood, and she will build a very similar coalition. Like Bush she will have lots of clever slogans like Compassionate Conservatism, but virtually nothing will be heard about actually reducing the size of government except as a mantra to discredit "tax and spend liberals." Like Bush, she will choose a Cheney-like running mate to provide "gravitas."
The Palin movement will reject any serious suggestion that the size of government should be truly cut. There will always be new wars to wage, new votes to buy, and new people to imprison.
Palinism will essentially be a re-tread of Bush-ism, and just as in 2000, people who want smaller government will flock to her thinking she is somehow better than the alternative.
Amazingly, many wil be fooled, forgetting that 12 years earlier, they had all voted for a "small-government" candidate who gave us 8 years of the most expansive government since the New Deal."
For more- see Lew Rockwell's prophetic "Dreading Republican Rule"