"Polecat" is the term lumberjacks used to refer to as skunks; later, it was used to refer to the lumberjacks themselves, whose odor was probably not unlike that of a skunk when they came in from the woods. The rugged loggers were also known for their hearty appetites. Lace is representative of all things refined and civilized - the very antithesis of a lumberjack.
When the restaurant was built, the owners wanted its name to reflect the timber heritage of the region as well as a sensibility to fine food and elegant dining. Thus, the menu offers food hearty enough for a hungry "polecat," served in an atmosphere that would not be unsuitable for a turn-of-the century lady in lacy finery.