I make charts of songs that are good candidates, good targets, so to speak. Then I try to come up with ideas for parodies. And 99% of those ideas are horrible.
I think I'm equally as abusive as the editors normally are for the "Letters and Tomatoes" column, which is the fan mail part of MAD Magazine and an ongoing feature.
My own personal tastes don't really have an effect on whether song is a parody target or not. But having said that, I try to pick songs that I actually like because I realize that I have to live with these songs for a long time, from when I'm working on them in the studio to possibly playing them onstage for the rest of my life. So I try not to pick songs that I know would drive me crazy.