Not half as much as Palin scares them.
you nailed it
Palin doesn't scare the Democrats. Many are hoping she'll run. At worst, she'll split the conservative vote giving Romney the nomination and he'd be a president liberals could live with.
They're scared of Perry. They believe that not only is he electable, but he represents the worst type of right-wing, Christian cowboy that scares the wits out of them.
Don't believe me? Go peruse some DU threads on this issue.