Why do apps vanish when I drag their icons from the dock to Icon Pallet?
You need to drag the actual app or document.
Apps are in the Applications folder. That is where you drag them from.
You cannot drag an icon off of the OS X dock to Icon Pallet.
If you do that, it just removes the icon from the OS X Dock (that is a function of OS X and has nothing to do with how Icon Pallet works.)
Also, when you have a Finder window open and have items under the Places heading, You cannot drag those to Icon Pallet.
If you drag from there, you are removing the item from Places.
If you remove an app from there by mistake, just find the original file and drag it back there (same is true for the OS X dock)