Basically: Peej was working for Babs. They were attempting to protect two ships. One had a whole bunch of civilians and their families (Quraci refugees, I think), the other had a few civilians and their families, along with the forward-thinking political leader who actually offered the first and only chance for genuine peace in Qurac in as long as anybody could remember.
Two missiles were launched at the boats. Peej was in one of her wobbly powers phases, and was only able to stop one. Babs made the hard call - save the leader, not the civilians, because a hundred deaths now and the survival of this leader means saving thousands or millions of lives later.
Then the leader gets assassinated by one of her aides or something anyway.
Peej is pretty pissed about it, but her anger is as much or more about her own helplessness as taking issue with Oracle's call (which she knows was the right one).
Of course, it all becomes completely academic anyway a few months later when Cheshire sets off a nuclear bomb and obliterates basically the entire country, so nothing Peej could have done would have mattered at all. But, you know, hindsight...