If I were in your shoes I'd be gelding that colt and get training him. There is a pleasure riding horse right there, and no need to risk your mare's life or health to produce a foal at such an old age. Look at it this way, if he is good enough to you that your willing to use him to sire he is the horse you would like to ride too, right? If not then geld him and/or sell him, find one that is the one you want to ride, or ride the younger mare. Breeding a 23 years mare is not fair IMO. Enjoy her for what she can still do, be it light riding or just looking great at pasture. What are your plans for the Palomino after the breeding? There is no market in keeping a stud for service, how many horses can you support? Can you keep a stud for his lifetime, do you have skills, pasture, spare time?
Your situation aside (and not judging or trying to crystal ball what might happen in your next 20 years) I agree with those that say the world has too many horses right now, and we all need to rein in on breeding right now big time. I just had 2 more dumped on me starving folks, and I'm past my limit before that. this are good, experienced, all around QHs that are well trained and sound, not junk or even unwanted. The plight of the other stud says it all, and it's being said with thousands of horses in each state and province right now. All of us need to look at the bigger picture and know that there are great riding horses (or whatever horses) out there already alive that need placement and the current economy and the future in terms of the lifetime of a horse born today is NOT good. We had years of relative wealth were horses were used by many for sport, not work. Even those in middle or lower income could have a horse for fun. Now the sports are diminishing in turn out due to costs of even the sport it's self, not just the cost of having and feeding a horse, and the people just don't have the disposable income they had before. This is made worse by the change in need for working horses too. Ranches don't even use horses like they used to, a quad is easier and only need to be 'fed' when it's running. Cheaper all way around and faster.
Sorry, really not singling you our, honestly I don't support any horse breeding right now, even though I have mares I love and would love to have foals again some time soon I know it's not right. I truly think we need to all be bigger about this and look at the whole picture in a more global or at least National way. The outlook for horses born this next 10 years is very bleak. We need to work together to take care of, and take into able homes those horses that already exist.