This seems to be a pretty low-risk signing for me. Palmer needs proper game time, which is something he won't get at Albion. By allowing him to go out and actually play real first team football, then hopefully he'll be able to make that step up. We won't learn if he's ready if he's only playing U23s football.
By having three "Senior" keepers at the club, you can give both players gametime in the U23s while the other is on the bench for the first team, with a view to keeping them both sharp if they're needed. I would like to think that by being released its gives Myhill that kick that he needs to continue his career. I don't think he'll be allowed to be so laid back this time round - we need all players to be fighting.
Regarding people questioning why Cutler is calling the shots... that should be pretty clear. He's in charge of the goalkeepers, he's the specialist in this department, and so he's ultimately the one that has to answer if that area is deficient. Let's trust him