I really hope that it's the last season. Fringe is bar none the best sci-fi on TV. The only problem is that Abrams, Kurtz and Orci have this terrible tendency to drag things out until fans hate them. See Lost, Alias, Xena and Hercules.
Yeah, the thing with Peter was weird, but the producers truly haven't disappointed yet, so I imagine that they'll find a good way to work this story.
As a weird aside, is it odd that I identify strongly with the characters in this show? Specifically Walter and Olivia. Like Olivia I was a part of psychological group studies as a child. And I think and act a lot like Walter. A lot like Walter, minus the drug use.