Second-placed Inter were rescued by a late own goal from Davide Astori as they drew 2-2 at home to Cagliari while two goals from Alberto Aquilani helped Fiorentina thrash Atalanta 4-1 in Florence to go third.
Gonzalo Rodriguez and Luca Toni also scored as Fiorentina, a far cry from last season's struggling outfit, chalked up their fifth win in a row.
Parma twice came from behind to draw 2-2 at Udinese where 35-year-old Antonio Di Natale opened the scoring for the hosts with his eighth goal of the season.
Defending champions Juventus, held 0-0 at home by Lazio yesterday, lead with 32 points from 13 games.
Inter are four points behind with Fiorentina and Napoli, who drew 2-2 with AC Milan on Saturday, a further point adrift.
Palermo, who have won only twice this season, had goalkeeper Samir Ujkani, midfielder Edgar Barreto and substitute Carlos Labrin dismissed in the second half while Bologna's Saphir Taider was also given his marching orders.
Alberto Gilardino put Bologna ahead with a half-volley and Manolo Gabbiadini added the second from a penalty a minute before halftime following a needless handball by Massimo Donati.
The red cards began to flow less than a minute after the restart when Albania goalkeeper Ujkani was sent off for upending Gilardino and Alessandro Diamanti converted the penalty to make it 3-0.
Paraguay midfielder Barreto was sent off for a second bookable offence and substitute Labrin followed with a straight red card for an ugly challenge on Archimede Morleo.
Bologna's Taider was sent off for a second yellow card.
JOB SAFE
Despite the defeat, Palermo coach Gian Piero Gasperini was told his job was safe despite the well-supported side languishing down in 15th place - a point above the drop zone.
"I am absolutely not going to change the coach," Palermo president Maurizio Zamparini, who used three coaches last season and has already fired one this term, told reporters.
"Gasperini is not at risk and will stay where he is for a long time."
Bologna coach Stefano Pioli was the first coach to be fired by Zamparini last season, given his marching orders before Serie A had even started.
Pescara's first penalty of the season was wasted when Ante Vukusic saw his spot kick saved by Gianluca Pegolo on the stroke of halftime at Siena.
Already trailing to Francesco Valiani's first-half goal, the visitors lost their heads as Marco Capuano and Damiano Zenon were sent off in the final minutes.
Siena, who began the weekend bottom of the table, have won four times this season but have had six points deducted for their involvement in the Calcioscommesse match-fixing scandal when they were in Serie B.
At San Siro, Rodrigo Palacio headed Inter ahead after 10 minutes but Cagliari hit back with two goals from Marco Sau, the first from Andrea Cossu's cross and the second from a rebound after Mauricio Pinilla's overhead kick hit the post.
Diego Milito had missed an open goal in between for Inter, who snatched a point when the hapless Astori turned Ricardo Alvarez's cross into his own net.
Inter had a penalty appeal turned down in stoppage time and coach Andrea Stramaccioni was sent off for his protests.