Interesting question. I think honesty is important, as im sure it will be clear later on in the year when you arent applying for palliative jobs. Dont be surprised if programs prefer candidates who want to stay and advance the field.
That being said, a hospitalist who knows how to handle and discuss goals and endof life care is wirth their weight in gold - so if you can spin it the right way in your personal statement then you can be honest but also appealing. There are many hospitalists who ended up being the ones to start palliative programs at small hospitals etc, so the added training can be very useful.
Also, keep in mind that: if you do palliative care clinic down the road that might have enough internal med to keep you satisfied.
Or if you are really just loooking to work in IM but have some added skills in palli, there are many smaller courses you could take (harvard has one for example) that wouldnt require you to devote an entire year for fellowship. You wouldnt be able to work as a palliative care doc with this route though..