It is definitely possible for the vet to miss the fetus by palpation, because that happened to my mare. I bought her at the end of October 2009. Had the vet preg. Check by palpation in November 2009 and said she wasn't pregnant.
By spring she was getting a big belly even though I was riding her all the time. Had the vet palpate her at the end of April and that time he felt a foal! Bouncing baby boy was born in July 2010.
So that would make the fetus about 3 months along when the vet missed it the first time. Is that correct?
PS. Would the fact that my mare was an older broodmare have anything to do with him missing it the first time? Like her uterous was more dropped down from having a bunch of foals? Or did he just simply miss it?