I value the importance of Peer Observations in the world of education. However, typically it is done with someone of alike content, a mentor, etc.
It is important to remember the value of learning from any professional.
When proposed the task of Observing a peer, suggest someone in a totally different content area. For example, when I did this (I am a Health Sciences teacher), I paired up with a Business Education teacher. We evaluated each other and learned a great deal. Not only was it less intimidating (since they aren't an expert in your field), but it was someone I wouldn't normally watch teach and was looking for more of their methodology as opposed to content.
I found this much more beneficial then how this is typically done. Plus, I was able to collaborate with a teacher in my building that I may not normally get the opportunity to collaborate with.