I have heard that the spiciness of Palak paneer is regional, but I don't have any historical or geographical facts to confirm this. So, is there anybody around here that knows if a proper, old-school traditional Palak paneer is hot spicy, medium or mild, and which are the various regional traditions?
Palak paneer is originally a North Indian dish- what you get in South India has been adapted to local tastes. If you want an absolute answer - it is quite mild compared to other paneer dishes. North Indian dishes have a base gravy made of tomatos and onions with red chilli powder and garam masala - this dish is an exception.
Hot, medium and mild are very subjective terms, which is why it is difficult to qualify regional variations in India. I have had palak paneer in north India and south India. Generally, this dish is hotter in south India. I am a south Indian, but have lived in north India for most of my life, and would call the north Indian (traditional) variety medium. Again, what I consider medium may be mild for some people, whereas for others it may be hot.
Most of the north Indian dishes are mildly spicy. I have tasted palak paneer in some dhabas in north India and each one varied in flavor. But mostly it is a mildly spiced curry!