I read the Memory Alpha entry for "Peak Performance" after watching it the other night. I forgot how much I actually enjoyed the episode despite some questionable characterization with Riker. Season two made big strides in characterization overall, and the moments with Picard and Wesley are among them.
I was surprised to read, however, that the people behind "Tin Man" set out to write that episode as a response to how terrible they felt "Peak Performance" was. For the life of me, I can't imagine a worse episode than "Tin Man" and find "Peak Performance" and all other season two episodes far stronger, including "Shades of Gray." The notion that season three was some fabled season where the show became perfect is a myth, as it had a handful of weak episodes and the stinker that is "Tin Man." That said, season three still felt like seasons one and two in some respects, and I prefer much of those episodes to the bulk of episodes in later seasons that made just about everyone insufferable.