You've done it now, you've reached the point where you've collected so many Pals you don't know what to do with them all. You're basically a Pal catching machine and you've enslaved made friends with more Pals than you thought possible. What now?
One of the best things you can do with these Pals would be to use the Pal Essence Condenser. This will let you select a Pal. You can then select other Pals of the same species to fuel that Pal to become much stronger. You can unlock the Pal Essence Condenser at level 14.
If you didn't know this already, you can actually just release Pals back into the wild (in a sense). Go into the menu and press R to drop the Pals. They'll be stuck on the ground in the Pal sphere, but at least they aren't in your inventory anymore.
Just accept it, you're a horrible person. You can make a meat cleaver at level 12 which you can use the brutally kill your Pals in cold blood. You'll then get the normal drops of that Pal, you psycho.
If you got to a small settlement, you can find a merchant to sell your Pals to for goods. Hopefully the merchant takes better care of them than you did.