Re: Peg Castle?
"Peg" can in some instances refer to a wooden stake. Therefore, I think a peg castle is somewhat similar to a wooden palisade, but extended to be an actual castle.
Regarding "Tel" I think Omnirizon is right on the money, but I also see another interesting connotation. "Tel" (or "Tell" - I have seen both spellings used) is also a term for an archaeological site where civilizations are found built on top of each other. This echoes the mythology of the factions that have it quite beautifully.
The above, however, is only what I see in the words of the terms themselves. I have not seen the terms themselves used outside of Dominions.
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