I don't think there's anything bad about the Palace jump technique. I agree that it is an exploit in that:
1) The designers probably did not intend it to be a useful game element.
2) The AI can't use it.
But neither of those things is necessarily bad. If we eliminated everything with those characteristics from the game, the game would become much less uninteresting I think
I think that a technique is bad for the game if it is imbalancing. I.e. if it is strong enough that it outweighs other techniques, thus reducing strategic choices and making the game less interesting. I don't think the Palace jump is imbalancing.
I wonder how many people have voted on this poll who have never done a successful Palace jump? If you haven't done a Palace jump then you shouldn't rush to judge it

- it isn't a trivial thing to do. It takes a fair bit of work to set up carefully and to make a jump pay off. There are compromises involved in doing it. E.g. you have to deliberately keep your population down in most of your cities (which forces your hand in other aspects of your strategy.) And you have to choose between rushing an early settler to a distant and initially non-productive location, and then boosting the size there with workers, or going to an early war to capture a good FP location. The longer you delay these things, the greater the impact on your original core because you must keep limiting population growth there. An additional tradeoff is against a tight build, for the same reasons (limiting population growth.)
I can't comment on MP in this regard but in SP games I'd say that a Palace jump is not even a good thing to try on most (i.e. over 50%) maps. On many maps, the things you have to do to set up a successful jump will cost you more than the resulting benefit.
All of these things add up to me to make the Palace jump an interesting game element, and one which enriches the game by providing one more viable strategy. A strategy which has costs as well as a reward and where these elements are balanced enough (even though this is by chance, not by the developers' intent) that it enriches game play by providing an interesting choice.
And BTW, all this is moot in Conquests in the latest FP implementation (patch 1.15) - with the model used in that patch there is little value in moving the Palace at all in most games. (Not in jumping it, and not even in moving it by building or rushing with a leader.)
