I like Quic Silver for my white-grey mares, and Fiebing's (sp?) Green Clean rather than Cowboy Magic -- it's cheaper and works better, IMO.
Not sure how well it'd look on a palomino, but I got my hands on this Twinkle silver dust spray once, and just for kicks, I put some on Magic (one of my white-grey mares)... If I got just the right amount of sparkles in her mane and tail, she actually looked like she was shiny and sparkly clean, without the sparkles being obvious. I put it on kinda thick at first on accident, the just brushed most of it out with a plastic mane brush. It left her fur pretty soft, too.
There's a gold mist spray, too, and that might work better, but this idea takes some experimenting.
As far as mane length, I've never liked the short-cut look, but it's all a matter of preference. For the tail, use MTG to grow it back. Also, don't use metal-toothed brushes, because they'll split hairs, and unless the tail is an absolute disaster for tangles, don't brush it at all... just give it a good wash in a bucket of soapy water, finger-brush it a bit, and keep some good detangler in it... that way and new hairs aren't getting split or pulled out.