Where's the actual Palindrome in the season two finale of Fargo?

Several characters end up where they started out, or end up in a place that reflects their situation from the beginning of the season.

Lou:

The episode ends with Mr. and Mrs. Solverson in bed, like in the first episode of the season, and Lou repeats his "and all the ships at sea" line.

Ed:

Ed Blomquist, who stuffed Rye's body into a freezer at the beginning of the season, dies in a meat locker at the end.

Mike:

Mike Milligan started the season taking orders in Kansas City. He thought that his work up north would lead to great things to him, but he returns to taking orders in Kansas City.

Hanzee:

We learned in the penultimate episode Hanzee got started when the elder Gerhardt found him on the street at eight years old. In his coda, he appears to be recruiting some young underlings of his own. (The deaf kid he's watching at the baseball park is implied to be Mister Wrench from season 1, since his new identity "Tripoli" is apparently the leader of the Fargo syndicate.)

The quote cited in the question seems to miss one of the main themes of the season, and the fact that another episode was titled "The Myth of Sisyphus": These characters are doomed to struggle without really accomplishing anything, to return at last to "the same limbo where they began."

Like the other nine titles, the title "Palindrome" is ironic. The season isn't a palindrome at all — it's the exact opposite. See this blog for more:

Like the other nine titles, the relationship to the episode is ironic—the finale isn’t anything like the first hour at all. Ed Blumquist dies in a freezer while he brought porkchops home to Peggy a week earlier. Hanzee creates a new life for himself and saves young Wes Wrench and Grady Numbers from two bullies, unlike the final time he saw Rye—getting bullied by Dodd. Milligan is put into an office instead of getting to rule the Upper Midwest like he expected. And Lou Solverson’s outlooks on life and his father-in-law Hank have been radically altered.

Taken as a whole, the season has other “anti-palindromatic” elements; for example, Skip Sprang’s vision of a typewritten future is mirrored by Maynard Oltorf, the gas station owner in episodes eight and nine who still writes his transactions by hand.

This title was either given metaphorically, due to the somewhat cyclical nature of certain character experiences, or there is a much more contrived, (nonsense-driven) "hidden word" in the dialogue of the episode for which I refuse to search! Oh, or it simply refers to the character "Otto", but due to his laconic nature throughout nearly the entire show, along with his death in episode 6, my money's on the metaphor.

I would suggest that it's about the running theme of feminism and patriarchy throughout the series, and is most specifically referenced in the scene where Lou and Peggy are driving back and Lou discusses a man's burden and Peggy discusses a woman's, and they are essentially the same struggle, even the same when they're back to front (like Peggy's, who's is quintessentially 'fubar') for some people. Although Lou and Peggy are talking at cross purposes, they are saying the same thing.

It also reflects the fact that the the world that every character in the show is in some level mystified by the world around them, is trying to make sense of it, and gets to grips with reality in their own way (e.g. Peggy through self help "actualisation", Mike Milligan through wit and poetic style, Lou through world weary stoicism), but is also chancing through the world and only surviving via blind luck, despite of, rather than because of, their various philosophies; it's the same thing, whether back to front or the right way round for all of them.