I know that in a conflict palette you can select the item by pressing one or more letters or numbers. Or by selecting the item with your mouse. But can you also select the item with your cursor keys and then press enter?
Nope -- you either select an entry with the mouse or type highlighted characters until the conflict list is reduced to one item which is then executed. Any keystroke that isn't a highlighted letter in the Conflict Palette cancels the operation, dismissing the Palette -- and that includes arrow keys.
That's nonsense ... but I once had a macro that could do that.
The mouse was moved to the top item of the palette, the arrow keys (up/down) moved the mouse to the next/last item of the palette and Enter or Space was used to click where the mouse was.
Unfortunately (or fortunately) I can no longer find the macro ... it was nonsense. 
That would be a really great feature as well as scrollable conflict palettes. The request has been made several times here on the forum. I have seveal conflict palettes that go past the screen and I of course can narrow things down with the keys as @Nige_S pointed out, and that is why I do. It would be great if you could also just press the down arrow key to have them highlighted until you get to the one you like and press the enter key. I think that would be an awesome addition to the conflict palette!