According to Malcolm Saxon, Peyton dropped his pants while she was checking out his foot. He wrote the letter to Peyton after Peyton lied about the incident in his book (Saxon claimed he was not being mooned) and Peyton went after this woman in his book from what I've heard. At minimum, Peyton should apologize to this woman publicly, to make it right since he lied about it in his book. This is according to the Malcolm Saxon letter. And he was the only witness to the incident.
If Peyton publicly apologizes for those two things, this whole situation goes away in the minds of most people. It probably won't happen.