Incorrect. Under no alternative does Sarah Palin become Vice-President. Joe Biden is legitimately the Vice-President, having been properly elected to that position by the Electoral College.
The only question remaining would be whether the Presidential election would have to be re-adjudicated (in which case, McCain becomes the only eligible option and must be elected by the House) or whether the position is vacant, in which case Biden succeeds the vacancy. There is no law or precedent to declare either way, and the most politically expedient solution therefore would be for Biden to become President.
I wonder if Pres. Bush would be recalled until a special election could be held. Since the election itself was lopsided by the dems not having an eligible candidate, then a special election in November would have to be held. Maybe the democrat candidate who got the next highest votes would be run. (hillary?)
The only alternative which would allow for McCain/Palin to take the Presidency would be for SCOTUS to rule that 1) the electoral college results are not valid and 2) a re-vote of the college is necessary and 3) the electors are not allowed to vote for Obama / Biden and 4) McCain / Palin elector’s hold together in their votes and finally 5) the dem electors split their vote between potential candidates and a few cross over.
In short, only the slimiest remotest wildest possibility could result in McCain/Palin based upon the prior election.
More likely that SCOTUS would invalidate the election results of all states and force a re-election but I think that is even a remote possibility.