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The entire premise of this argument is stupid.
Most children grow up trying desperately not to be whatever it was their parents were. It's an act of conscious determination to respect your parents' choices and to want to emulate them. Every bit of Palin's behavior has been picked apart on the national stage; her children won't have much choice but to make a critical assessment of her when they get older. (Assuming they're capable of critical reflection later--Bristol apparently demonstrated this capability before her mother and her handlers shut her up.)
I worry more about her using them and then smugly proclaiming that her choices were an unselfish attempt to protect them from big bad straw liberals than about her setting a bad example for them. That's something for which, as they grow older and get a perspective on the whole thing, at least some of them might never forgive her.