I have not had the pleasure of being able to try one of Noko's palm rests, but they look fantastic.
I recognize the smell that you have described, and I think many people will know it from other leather products as well. In my experience, that smell fades over time. Though I understand that if you find it revolting, you would rather just RMA and replace it with something else.
Though I would ask Noko about it too. He also treats the leather in a certain way (there is a description of the process on his forum somewhere). I am not sure if it is the same kind of treatment as the Filco has undergone to make it smell that way.