VZ will, as said, most likely gimp the phone and maybe through some branding on it to boot.
I hate VZ, for personal reasons, and would hate to see them get the phone but it's in Palms best interest and the rest of us too, as already mentioned too.

But... at the end of the exclusivity period , If they're moving enough phones, could Palm renegotiate and extend that exclusivity?

Oh yeah, hasn't VZ been getting the iPhone for years?