She did know what was going on -- the interviewer asked her prior to the interview if she was ok with that being the backdrop.
Obviously, all of us that eat meat know that the animals are killed. This backdrop was unnecessarily grotesque, however. Every station that's run it that I've seen has pixilated several parts because of the gory images (they said.)
I don't think there's anything wrong with her agreeing to that backdrop, but it is wrong for her to claim now that she didn't know what was going on. She clearly looks back at one point and sees the process, although she wasn't watching the whole time. I think it just shows that she has a little bit of a tin ear. And a habit of lying when she gets caught in awkward situations. She's done the same thing to Katie Couric, when she lied about what Katie asked about the newspapers Palin reads.
Turkey Gate - The Fiasco That Wouldn’t Die. « Mudflats
None of it is a big deal, except for the way it illuminates Palin's character.