There was a doctor from the Sansum Clinic in Santa Barbara that wrote a book about blood sugar and high cholesterol and said that all of the diet changes to fight high cholesterol have had the opposite effect on patients. There is no evidence that eating high quality fat raises cholesterol levels. (I gave my copy to my mom who has of course never opened it, sigh.) There has been lots of research on this in the past 10 years or so.
Eating low quality fat, highly processed fat is to be avoided, but you want to consume ingredients that are less processed.
So, not only is the cereal an issue, so is the 1% milk. After going Paleo, I never returned to drinking milk, but sometimes use it in recipes. Using whole milk greek yogurt is a better choice, IMO.
http://www.marksdailyapple.com/dairy...#axzz3hmdzJrGM
The idea behind Paleo is that everything you eat is nutrient rich. If you're going to eat something high in sugar, it should be something that has lots of additional health benefits like a 1/2 a cup of berries.