The term was originally cooked up when the radical left lashed out at a group of mostly Jewish elder statesmen (LBJ anti-communist originally liberal Democrats) types and intellectuals centered in NYC (Norman Podhoretz, Irving Kristol, Gertrude Himmelfarb, Midge Decter, Sidney Hook, Alexander Bickel, Walt Whitman Rostow, Eugene Rostow, but also Daniel Bell, Jeanne Kirkpatrick and Daniel Patrick Moynihan) fled the Demonrat Party (with the conspicuous exception of Moynihan) when it was seized by McGovern and the communists backing him. Most of them apparently decided that the Demonrat Party was gone and only the GOP could serve as an anticommunist vehicle thereafter.
Now, there has always been a disreputable element, imagined somehow to be on "the right" which thinks that genetics has something to do with ideology. They might be termed "blood and soil" folks who think that your ancestors' nationality or faith is somehow relevant to a judgment of your ideology or even your right to be a resident and/or citizen of our country. The actual "neos" were, ummm, not like them. Therefore they were horrified when the actual "neos" were embraced as allies by the conservative movement (starting with the American Spectator and Bob Tyrell). The "neos" enthusiastically backed the Vietnam War and anticommunism. They were slower (except for Decter and Himmelfarb) to align with social conservatism and they were probably mystified by fiscal conservatism.
The actual "neos" are either dead or approaching their 90s but the Nation and the New Republic revived the term to stir up trouble in conservative ranks. Convinced undoubtedly that conservatives are racists, anti-Semites, and xenophobes, the leftist publications decided to smear conservatives and, observing the likes of atheist Sam Francis in the "paleo" ranks (purged by the Washington Times for addressing neo-Nazi conferences of American Renaissance), denominated the blood and soil nutcases (who are also antiwar antiAmericans generally) as "paleo""conservatives" as though somehow they had conservative roots and the mainstream conservative movement which elected Ronaldus Maximus and destroyed the leftists' Senatorial heroes as "neo"conservatives.
Meanwhile, the administration of Ronaldus Maximus knew well that the "paleos" were the funny uncles in the attic of the GOP and that they were not and never would be ready for prime time. They were politely ignored by Reagan until finally they figured out in 1986 that they were not credentialed and were not going to be. Until then, they told themselves that they were in line. In 1986, they figured out that they were NOT in line and they exploded in rage, not that anyone other than they cared.
The enraged ethnocentric nutcases have now been around as a minimovement for 21 years and have aligned with the libertoonians and peacecreeps and other assorted politically unacceptable and embarrassing exotic flora and fauna and they want to be taken SERIOUSLY NOW!!! They are fed up with being just funny uncles and want some of the action. Thanks, but no thanks.
You left quite a bit out of your history. Rather than the "funny uncle" Paul was in the GOP mainstream during the Kosovo War. Rush, DeLay, and Hannity and most freepers, like Paul, opposed that war as Wilsonian. A majority of Republicans in the Senate (almost all conservatives) voted for an end to bombing even while our troops were in harm's way. Heck, even though Bush supported Clinton's war, even he called for a more humble foreign policy. It is not Paul who has strayed from this anti-Wilsonianism but the rest of the party. Some old-time freepers remember this well (though some choose to "revise")