We've always made our pegs by taking straight grained boards and ripping them into squares just a 1/16 of an inch larger then the finished peg size. Then shaving off the corners until it fits through the test hole, in the seat of the shaving horse.
We never wet our pegs, again.
When the dry peg is driven into a wet timber frame the peg draws some moisture into it from the frame and swells up a bit to make it a tight fit. This is why when we test fit things using these pegs we never drive them in a lot, as we're going to drive them out again to dis-assemble.
Jim Rogers
