Let me preface this post by stating that I support the UFC's decision to cut Palhares. He was warned and ultimately, he could not change his behavior. My purpose of writing this is to offer a technical perspective on why Palhares had such trouble in letting go of heel hooks, and it has nothing to do with speculation on his level of intelligence or his morals.
If you look at Palhares' submission wins at ADCC (http://www.youtube.com/watch?v=JpXEntaqZ1w) and his armbar against Salaverry, you'll see a standard timing of release to all his submissions. Palhares famously sprained Avalon and Lovato's knees but he released these submissions fairly quickly. Lovato might have tapped a split second too late and Avalon was the victim of a terrible reset position from the referee. Against Salaverry, Palhares controls his submission and releases quickly. Since he has shown he is capable of releasing submissions at a normal pace, why did he lose control of this ability in 2 of his UFC bouts?
My theory is that it all has to do with the nature of a heel hook. Unlike most submissions, the heel hook is not done from a dominant position. This explains why Palhares was able to bring the fight to the knee-reap position time and again with such ease against the world's best. His fights against Massenzio and Peirce are remarkable in how he is able to successfully play the same game against someone with months of preparation time. In the Jon Jones era of mix-it-up every fight, it was crazy to see someone use a you know it's coming but you still can't stop it style. The position was near impossible to avoid since Palhares chained his guard pulls with his excellent wrestling. Since the heel hook is applied from neutral positions (like 50-50, a position named for its neutrality) the result of the position often comes with who can be a split second faster.
To me, this explains why Palhares goes so hard on his heel hooks. At the UFC level, you just have to go all out because the opponent is always very close to escape (which is very different than other submissions). Here is a key metaphor: Imagine doing a max power clean-like motion for 3 seconds as hard as you physically can and having a buddy slap you on the back. You can try lifting up your car from the bumper. (Try not to pull a back muscle.) While lifting, you might not even feel the slap. You might feel it but your brain doesn't process it till a few seconds later. I believe this is what happens to Palhares mid-heel hook. He goes so physically hard do to adrenaline and the nature of this submission that he doesn't feel/process the ref stoppage at the same rate that he has shown with other submissions or during less-intense sport grappling matches.
This possible explanation is not an excuse for the behavior but rather a perspective to understand the situation. Other submission grapplers are able to go hard and still release a move in a timely fashion (but no one has ever attempted and finished this amount of heel hooks in the UFC). Ultimately, I hope people can see that Palhares was not evil nor dishonest. He was just a guy who went too hard sometimes to stop on a dime and he caused damage because his signature move happens to be the most dangerous submission allowed in MMA.