Let's see... Peanut Butter is a "scary, magic, murder" Bidoof who only lives and would stop at nothing to "slake his father's blood thirst". This blood thirst most likely came from the abuse he suffered in his former life as "Pikatwo", Rusty's replacement to Pikachu the Beedrill. As we see in the Battlehaus episode, Pikatwo made a wide, manical grin seeing his master/tormentor Rusty getting his face beaten to a pulp by Battle Bart.
At the end of that episode, we see Pikatwo on fire after Rusty set the Battlehaus, with Rusty claiming that Pikatwo was evolving. Unfortunately...Rusty may have been right! How on earth Pikatwo (or anything else) can still be ablaze by the time Rusty took him to the Pokemon Day Care and not be consumed by the fire after such a long time. And although the Day Care lady mentioned that Pikatwo the Bidoof was on fire, she never said anything that it was dead. So...Rusty and EV trainer decided to actually put Pikatwo into the Bidoor/Ditto mix until the Team Rocked truck squashed them all up.
Fortunately for Rusty (and unfortunately for the world), the trauma of the fire, combined with getting crushed by Team Rocket's truck, wiped out almost all of Pikatwo's memories except for Rusty being his "father" when he finally re-emerges as Peanut Butter.
- Jossed. Past Rusty shows up in the finale and ends up saving the day.