Have also seen that Scott Banks has been linked to a loan move to Dunfermline, who are in the Scottish Champ.

From watching the U23 highlights I've personally thought he looks quality so a move to a team not even in the Scottish top tier is disappointing. I'd argue he isn't going to learn an awful lot from playing at that level, as opposed to a loan to a EFL championship/ top L1 side.

Or maybe he isn't that good?

Kirby has been out on loan before to Blackpool looks like he did well from what I read at the time but no one has been back in for him so what does that say. If you look at the players over the last few years that have been closest to the first team they have hardly gone on to prove us wrong in our decision to get rid of them.
Levi Lumeka is at Troyes in the French second division, Jason Lokilo is at Doncaster, Sullay Kai Kai is at Blackpool but underperforming according to this from 2 weeks ago [Link] Hiram Boateng is at Cambridge and kicked around a few League 1 and 2 clubs, Gio MacGregor is a Dulwhich Hamlet along with Reece Allassani from a previous generation of future stars . Ryan Innis is at Charlton only played a few games but does seem to be doing ok , to be fair we persevered with him the longest. Even poor old Johnny Williams and he got more of chance then most.
That are not loads of players that we have released because they didn’t get a chance that are tearing up the championship, when Wan Bissaka and Mitchell were good enough they got their chance. Lewis Grabban is the last I can think of who we got shot of and had a good Championship/Career.
We have done well with younger players when we have had to chuck them in like Wan Bissaka or Mullins and Morrison and Clyne, Moses and Zaha who were all given their chances early because of administrations, so may be giving them games at an earlier age gives them the experience they need. Although to be fair Osborne, Rodgers Southgate and later Watson, Soares and Routledge all came through regardless in more settled periods and being skint and forcing us to play hardly helped Woozley and Wayne Carlisle.
So if we had to give Boateng a run of 20 matches would he now be the energetic box to box midfielder we need? Lets see what the academy does over next few years.

One supporter of hacking argued that without it "you will do away with the courage and pluck of the game, and I will be bound to bring over a lot of Frenchmen who would beat you with a week's practice -Blackheath secretary at first meeting of the F.A

History suggests that a loan to a lower league club is often the first step to the end of that player's Palace career.

I know that the argument is that by giving the player an opportunity to play at senior level, even if with a League One or Two club, is worth more than any number of Under 21/23 games.

However, I am trying to think of any of our "hopefuls" that have followed that path and then returned to establish themselves in the 1st team squad.

True Willo, but I am thinking more recent history. Say the last 10 years.

In the case of Salako the Swansea fans were raving about him and even in those pre internet days that had drifted back to us fans so it was no surprise he returned and broke into the first team.

One more point

Richard Shaw said the same when he left his post as our U23 Head Coach just over a year ago.