The word “baptism” has long been used in a wide variety of contexts that have nothing to do with the Christian sacrament of baptism, and no one ever said that these usages were perverse or sacrilegious. For example, you might read about a soldier: “My baptism in combat occurred on just the third day of my tour, when we were ambushed by insurgents just outside of Fallujah.” Or in a football game you might hear: “Smith’s injury will bring in Jones, the redshirt Freshman quarterback who will have a baptism under fire here in the fourth quarter with the game on the line.”
Associate baptism with water torture and some people will object. The direct association with the Christian sacrament hasn't been bleached out by its use in an idiomatic phrase.
Whether or not you get morally indignant about Palin's comment, the observation that her appearances have a collection of one-liners that aren't really to be taken seriously is something to consider.
And while the waterboarding comment wasn't the focus of her comments by any means, even bringing it up suggests that she's a bit out of touch with where the country is now. I doubt anybody's main concern today is with bringing back waterboarding (if it ever really went away).