Well, dressing up in the Peter's underwear seems like a bit of an odd reaction if she and Peter!Chameleon "only" made out.
From what I understand, she and Peter slept together before, but Peter was drunk at the time and, upon sobering up, she didn't take it all that well. When Peter!Chameleon made a move on her, Michelle must have assumed that Peter was okay with them sleeping together and proceeded accordingly.
On the side note, Fred Van Lente's explanation does sound like a cop-out, but I am willing to give him benefit of the doubt.