I am a maritime expert, and I've never heard of it in a maritime context either. In what situation did celtaddict hear this?

The only thing resembling a "peg" in a maritime context is a belaying pin, which is refered to as a "pin" for short, or the round piece of wood holding a ship together called a treenail (pronounced "trunnel").

I have heard and agree with the terrestrial origins as descibed by Amos, but as to his peg-leg theory, well... he may just be "off his rocker." :)

Sorry--I just couldn't resist.