How is it that the animals (except Benjamin) are unable to see that Squealer is rewriting the commandments in Chapter 8 of 'Animal Farm?'
It's because they don't take the time or put in the effort (or perhaps have the skills, but I think this interpretation takes a significant meaning out of the book) to find out what is "true." It takes a great deal of effort to sift through the mass of information that we find on TV, in newspapers, newsmagazines, blogs, and try to find out what is true/factual. Look at the recent adventures of the Governor of Illinois. If you listen to the tapes, there seems no possibility that illegal activity was taking place; if you listen to him, this is just business as usual. Is it? The rewriting of history is another example. When I was in grammar school, all our Presidents were heroes; today we have dug up some dirt on all of them and reduced them to "ordinary" status. What is really true about these men? Am I to believe what I was told about them (original commandments) or what I am now told about them (new commandments)?
This is the germ of the idea that makes up "1984" where the past is infinitely malleable in order to serve the needs of the present.
I would rewrite your question a bit. "Why is it that we are unable to see history rewritten in front of us" and "What will be the consequences of our inability/refusal to see."
Some of the animals cannot read and other simply cannot remember what the commandments initially said. Squealer is an expert at changing the commandments just a bit so that they seem to read like the old commandments but really mean something else. For instance, in Chapter 8, Squealer is caught changing the commandment, "No animal shall drink alcohol" to "No animal shall drink alcohol to excess." By changing two words, he has changed the commandment entirely. He does this with other commandments like "No animal shall sleep in a bed" to "No animal shall sleep in a bed with sheets." This slight change is so subtle that it simply confuses animals who notice but they are afraid to questions what is really happening.
Remember that the plot (or rather 'plight') of Animal Farm was already written in the aftermath of the Russian Revolution and the rise of the Bolsheviks to power. Orwell expresses the naïvté of the population under the sway of mass propaganda, then repression. He uses the simplied imagery of animals' denial of their being manipulated to express what really happened during the Stalinist regime (and return to totalitarianism).