It seems from this article that perhaps MS already had worked out how to do copy protection with Palladium, or at least thinks it possible contrary to what was said at USENIX security: http://www.theregister.co.uk/content/4/26651.html
[Palladium related job advert...] Our technology allows content providers, enterprises and consumers to control what others can do with their digital information, such as documents, music, video, ebooks, and software. Become a key leader, providing vision and industry leadership in developing DRM, Palladium and Software Licensing products and Trust Infrastructure Services.
"control what others can do with [...] software. [...] develop DRM [...] and Software Licensing products". Also again shows that Palladium is quite centrally a DRM platform, which is kind of obvious from the design, and anyway from the naming of the associated patent "DRM-OS". Adam