Yep. I remember when SNL was doing its Reagan skits, making him all bumbling and forgetful. But they couldn't make him unlikeable. They had to keep that or lose the entire premise of what an impersonation was supposed to be. Consequently, the skits never hurt Reagan. Every time they thought they were skewering him, it only endeared him to a wider populace.
Same thing with Palin. The problem Tina Fey would have in complying with Chevy Chase's urgings to "decimate" Palin is this: she can't "do" Palin with such spot-on accuracy and make her unlikeable at the same time. Yeah, they could go for the liberal agenda and have the Palin character coming across corrupt or evil or mean or dangerously stupid, but they'd lose what made the impersonation so great in the first place: authenticity. Without that, it's not Palin, and the SNL crew would be the only ones to suffer for the grotesque distortion. Either way, Palin wins.