Totally, completely different malts. You want rauchmalt (smoked malt), and ideally you want to do a partial mash with it. It can be used as a base malt; rauchbiers can be well north of 50% rauchmalt (sometimes 100%). I *love* me some rauchmalt, but if you just steep it you'll basically be washing a lot of unconverted starches into your wort. Do a search on partial mashing; it's easy, you really just need a grain bag, a collander, and the ability to hold temps steady at around 150°-155° for a half-hour or so. It's a good technique to have, especially when working with malts like this that really ought to be mashed.
Peet-smoked malt is wholly different; ok in SOME Scottish ales, but it's a harsher, more acrid flavor, not smooth at all. Quarter pound, TOPS. It's not really traditional in any beers, it certainly does not belong in a German beer. Most I've ever heard of someone using was David_42 using a half-pound in a barleywine he aged for years. A couple ounces will give plenty of flavor.
EDIT: You use so little peat-smoked malt there's no need to mash it. I've used it in a smoker porter (one style it can be OK in; Stone Smoked Porter uses it), and it's fine since it's such a small amount. Avoid it for this beer, though.
