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Quite a different account of the Palomino story appears in this document:

http://www.mustangaero.com/images/Midget%20Mustang/Midget%20History.pdf






The Midget Mustang lineage is confirmed in this article from Flying dated January 1967 (see attachment):

http://books.google.fr/books?id=CFLFuZzLe_4C&pg=PA15#v=onepage&q&f=false

 




An earlier mention of the Palomino is found in Sport Aviation in 1965:



 



There were plans in 1964 for the Palomino to use the 130 h.p. Franklin 4A-235-B but I do not know if this ever happened:



Source: The AOPA Pilot: Voice of General Aviation - Volume 7, Part 2

 



The two-seater variant was once registered as the Palomino 100-C:

http://www.aircraftone.com/aircraft/models/san-antonio-aviation-palomino-100-c-7950202.asp




Also, I find it hard to make any sense of what Aerofiles writes about the Palomino:




This would imply there were more of the type than the prototypes, which obviously doesn't seem to be the case!

 




As an interesting addition to the story is given Under the Palomino entry of the 1985 edition of Jane's All The World's Aircraft: a cross-lineage with the Mooney M-19!!!


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