My wife and I are going, although in my case I'd characterize it less as "taking her there" and more as "dragging her there".
It's a really nice venue, IMO... this will be my 3rd time seeing DT there. There are tons of restaurants and hotels in the area, so you can really have your pick depending on what you like... the Albany Pump Station is probably the closest restaurant / bar, and is a very popular place to go prior to concerts at the palace.
As for hotels, we stayed here last time:
https://hamptoninn3.hilton.com/en/hotels/new-york/hampton-inn-and-suites-albany-downtown-ALBHSHX/index.html?SEO_id=GMB-HP-ALBHSHXIt's mid-range, price-wise, and is an easy walk (3 blocks?) from the venue.
The one thing I've noticed in the past is that not much is open AFTER the concert because it's located near a lot of state offices where people might go someplace for happy hour but also not stay out late. However, last time I saw DT there it was a Tuesday, and this upcoming one is on a Saturday, so I'm guessing it'll be a different scene.
Hope that helps! Enjoy the show!!