Absolutely submit the peer recommendation. Optional is not truly optional if you want your application to be viewed in the same light as the others. You are focusing I feel, too much on the word “peer”. Dartmouth simply doesn’t want yet another recommendation from someone who is in a supervisory position like a teacher or coach. If you doubt the ability of your friends look at a sibling, cousin, neighbour or co-worker. Someone in your life that can provide some insight into who you are and what will you bring to Dartmouth’s community.
My daughter’s peer recommendation came from a younger classmate, a year behind, but not a close friend. The classmate spoke about those things she knew about my daughter. It was a narrow, focused recommendation but it gave insight into my daughter that was beyond “she’s an excellent student”, “she’s a leader”. She wrote on those things that she thought made my daughter unique and why Dartmouth would be fortunate to have her. Dartmouth must have liked what they read as she was admitted as part of the Class of 2019.