Peer reviewers aren't always going to be great writers. Peer review gives you another aspect from another person that is reading your paper. Plus, it’s a great way to see your mistakes both grammatically and body lengthwise. I think that the strongest in a peer reviewer, the aspect of that person and as for the weakest, it can be the poor grammar or punctuation that person holds.
I don't see the need in having peer review before you even start writing. I don't see how that can help besides generating ideas for that specific topic. I think both big groups and small groups have their pros and cons into peer review. More people means more ideas and helpful tips but yet again small groups just gives you more of a comfort zone for people who are shy. The whole class time is enough time for peer review. There nothing more you can ask for if it’s the whole class time