Because Stewart and Santorelli who ended up playing 1RW that year were so good defensively? Both were significant downgrades overall over Palmieri and about his equal defensively.
I think Stewart was a Boudreau guy, and at the time I think there was still a belief that in the right situation and motivated, he could be a more consistent scoring power forward. They got him on the cheap and it wasn't unreasonable to think that he could pan out and outplay Palms, while bringing a physical element as well.
On the Palms trade in general, to further stomp this dead horse: Like others have said, I think Murray made an example of Palms after a frustrating playoff exit, and maybe felt he wasn't putting it together under Bruce's watch the way he should, which is understandable to a point. But I just see that sort of motivation for trading young talent as poor asset management unless the player is reaaally floundering. Which I don't feel was the case.
When it all shakes out, I have no issue with the fact that Palms was eventually traded, it was that Murray got pissed off and shipped him out a year too soon. There was nothing to lose by waiting, and it bit us in the rear the next season.