The incorrect execution of the CPU (mostly NOP sliding) starts after the instruction at ROM address 0x02D5 (CALL u16), which calls the address 0x4000. In BGB, the MBC is set to ROM7, but in Peanut-GB, the second ROM bank is still set to 1, causing invalid instructions being executed after the jump to 0x4000.
This game uses MBC2, so this is probably a bug in the Peanut-GB MBC2 logic.
The incorrect execution of the CPU (mostly NOP sliding) starts after the instruction at ROM address 0x02D5 (CALL u16), which calls the address 0x4000. In BGB, the MBC is set to ROM7, but in Peanut-GB, the second ROM bank is still set to 1, causing invalid instructions being executed after the jump to 0x4000.
This game uses MBC2, so this is probably a bug in the Peanut-GB MBC2 logic.