Peter was mostly watching as a referee. As much as he didn't care for Spike, he didn't want to see anyone actually harmed. Nor did he want Angela to turn the vampire into a gibbering idiot. He was enough of an idiot on his own.
But neither Spike nor Angela would back down from this on his objections, so the next best thing was to sit on the sidelines and watch them get it out of their systems.
"Hello, dear," Peter murmured to Sarah, giving her a kiss on the cheek when she settled against him. One hand wrapped around her, the other picked up his soda, thus keeping him occupied.
Then he looked back at the participants, and waited.