My quick, lunch time opinion, The tenon would be shortened to 3" deep by 1-1/2" wide, and the 3/4" peg would be centered at 1-1/2" off the edge. This is with no housing. I saw a boring machine on the end of the timber, are you boring mortices with the machine? With a 1" peg I would push it to 2" off the edge/shoulder and lengthen the tenon to 4". But I have switched all minor pegs to 3/4" , pegs that are really holding something together are 1" or 1-1/4".
Tim
