In preparation for a peasant heel, waste yarn is knitted over half the stitches, then the main yarn is used to re-knit those stitches. Later, usually when the sock is otherwise completely done, you come back to remove the waste yarn, pick up the "live" stitches, and re-knit those stitches into a toe-ish shaped heel.
So here we are with the waste yarn knitted in and an inch or so knitted past that point.
I decided I didn't want to wait, but started removing the waste yarn and picking up the live stitches right then.
In retrospect, and in all future endeavors, I would not do that. For one thing, having the main circular needle and the secondary one (used for picking up the live stitches and knitting the heels) that close together was a real pain. It was awkward and unnecessary. Secondly, I ended up having 4 ends of yarn all interfering with each other. There were the two from the main knitting, and also, the two from the heels. I simplified some of the problem by tucking the main balls into the socks....they weren't being used right that minute anyway.
At around midnight last night I completed the heels (can't sleep if I have a "creative problem" hanging over me). They turned our rather well. I did them just like a regular cuff-down toe, with paired decreases every other row. They are rather pointed when off the foot, but ON, they fit perfectly and don't look weird at all. This may become my favorite type of heel.
I see the potential for a modification in my next pair of socks though. I think I might try decreasing only every third row, to increase the depth of the heel. Then, once sufficient heel depth is reached I will decrease EVERY row for a more rounded heel. There is just something about pointy heels that looks so ..... wrong!