“They don't remember him.” “How could they, he never existed.”
That was a big problem for me too, LibertarianLiz. Then in the first scene of the first episode of this season, two observers (October and December) meet in a diner. Heres the transcript from: http://www.fringepedia.net
THE OBSERVER: (somberly) I received your message.
DECEMBER: Then you know we have a problem.
THE OBSERVER: (emphatic) It is impossible. The timeline has been rewritten. He was erased. And yet traces of him continue to bleed through.
DECEMBER: It is, as it has always been, our responsibility to insure events play out, as they were intended, before your intervention. This started with you. It must be you who ends it. (hands over a small metallic bar)
DECEMBER: They can never know the boy lived to be a man.
THE OBSERVER: I will take care of it.
That tells me the writers made a little boo-boo on the close of last season. October (The Observer) should not have said he never existed but more like - he never existed past childhood. Walter confirms this in the 3rd episode - last night.
http://www.fringepedia.net is awesome BTW. Helps me with this amazing program.
At least this is how I understand it in the universe I'm in currently.
As I said with my previous posts, you can just keep going on and on about how this negates WAY too much of the past storyline.
However, it also makes abudantly clear that Peter is the lynch pin of the entire tale.