To sync with a Palm, you must install the Palm Desktop software as well as install an iSync Palm Conduit, available on Apple's iSync page. It's straightforward, but no, iSync does not support Palm out-of-the-box.
While I understand it's frustrating to not be able to sync to a server without .Mac access, iSync is hardly useless without that.
Bundling iSync with .Mac would deny Palm, cell phone and iPod users the ability to sync their stuff.
iSync can sync with everything straight out-of-the-box with or without .Mac -- the only functionality you'd lose is syncing with .Mac. This prevents you from syncing between computers, true, but that's only a small fraction of what iSync does.
Apple is kind of heavy-handed with iSync being able to only sync to .Mac servers, but then again, if they opened up iSync to be able to sync with other servers, who would people yell at when it didn't work with their choice of server?