For me, this is a sensitivity issue. For example, if some politician said that 12 people were murdered and it was a holocaust, I think Jews everywhere would have a right to take issue with that politician for not having enough sense not to compare the murder of 12 people (as horrible as that is) to our Holocaust.
In a like manner, I am astounded that no one in Palin's camp knew what the historical meaning of "blood libel" is. If she doesn't know, wouldn't you think someone around her would know? And if they did know, and still used the term, then that, to me, is being very insensitive to Jews everywhere.
Now you may say that Jews don't own the term "blood libel." No, we don't. But that doesn't stop me from taking issue with her for using it wittingly, or being upset with her for being ignorant of the term and using it unwittingly. Has she never heard the term "blood libel" before?