I don't know what is going on with the Palo dress code. On our May Fantasy cruise, there wa a woman in what I can only call "short shorts." Yes, they were part of her outfit--paired with an obviously made to go together jacket, and she did have the body for it, but no one really wants to see her lower cheeks as she walks out! And, as you said, they seated her.
If they don't enforce the dress code, there IS no dress code.
We do dress up on formal night. OK, on the high school grad cruise, I told the guys khakis, a dress shirt, and tie OR nicer. I didn't have to tell the girls anything--they all "dressed." That was probably the least "dressed" our group has ever been.
It doesn't bother me that people don't wear a tux or ball gown, but how hard is it to do something that looks like "Sunday clothes?" But....since it isn't going to change, I vote for "It isn't going to bother me....."
And...am I the only one who still believes that when the kids are dressed to go "out," their manners improve? But then, I've seen some fully grown "kids" exhibiting some pretty horrible behavior in the dining room. The worst was when the head server took over all of our team's tables except one because that one was being so rude and obnoxious and making all kinds of extra work for the team! They came to the dining room full of plenty of adult beverages, and would swap seats mid meal, send food back 2 or 3 times, etc. Poor Joyce!