IMO, Gov. Palin knew she was an EXTREMELY long shot. She had little money (the real $$ are in the GOP-e), and there were at the time other fairly strong (or at least then seemingly so) conservative candidates in the race to siphon off some of her support. Plus, the MSM would surely slam her 1st and foremost.
So, I think she figured her only chance was to use her VERY limited resources and try to, one might say, build a wave in a non-conventional manner. When that did not pan out - call it a failure if you wish - there was no sense in jumping into the race. At most she’d weaken other conservative candidates, which it appears at least to me she was trying to avoid. So, she bowed out. But, up until then, she had to give her supporters some encouragement that she might run, or she had no shot at all.