Peggy didn't die and doesn't have Alzheimer's
Steve and Peggy only did it once. After he first got the shield, they got together for a drink and it just happened. About five months later, she found out she was pregnant with his child. She had a daughter, Mary. When she later got married, her husband treated her like his own. This daughter grew up and got married to a man named Richard Parker. I think you can guess the rest.

Peter was standing at his mother's grave holding May's hand. It was his mother's birthday and the two had decided that her father should find out she existed. Peter was going to the tower and he invited his grandma.

He walked into the living room to see his grandpa and dad on the couch, holding hands. Peter briefly thought how weird it is that his adoptive father is dating his biological grandfather but it didn't matter that much. "Dad, Captain. I invited over my grandmother. I hope that's okay. It's my mother's birthday so we wanted to spend some time together."

"Yeah, kid. That's fine." They continued their conversation. Peter smiled as the elevator doors opened. "Hey Grandma." Peter says, nodding towards the couch. She nodded. "It's so good to see you again Peter." She said loud enough for the two to hear. Steve's head went straight to them. He let go of Tony's hand and walked over to her. She hugged him immediately. "Hello Steve."

"Wait, Peter's your grandson, Aunt Peggy?" Tony said as they hugged as well. "Yes. I hope he informed you that you mess up with him and I won't take it." He shuddered and saluted her. "Now, Steve, I was hoping to talk to you about something. In private." Tony grabbed Peter's shoulder and took him to the kitchen, starting up a science conversation.

"So, do remember the night when you first got the shield?" She asked. "How could I forget." He gave her a soft smile and she returned it. She looked over and watched Peter in the kitchen. "Well, I think you should know that Peter's mother, my daughter, was the result of that. Now I'm going to make Peter a sandwich." She walked over to Peter casually and inserted herself into the conversation, leaving an open mouthed Steve.

A few days later, Peter was sitting on the couch and Steve walked in. "Morning Queens." He said stiffly. "Morning Grandpa Brooklyn." Steve looked up from his newspaper, astonished. "What? Did you think Grandma didn't tell me?" Steve sighed. "Don't call me that. Just pretend it never happened. Please." Peter sighed and nodded. He knew that Steve wouldn't want it out that he was his grandfather, just like Tony didn't want it out he was his son. It wasn't that he was ashamed of him, and Peter knew that. It was for Peter's sake.

Peter just walked out of the compound quickly after and went down to his mother's grave. "Hey Momma. I talked to Steve again today. He would've loved you I know it. You look just like him, minus the hair from Mays pictures. I've been told I look just you too, but with Dads eyes. I don't see it so I guess Steve can have a pass there. But, I still think that its so unfair you never got to meet him." He checked his watch. "I've got to go back or they'll get nervous. Love you Momma." He pat her gravestone and went back to the compound. The second he walked away, Steve came out of the shadows and sat next to her grave. "Hello Mary. I wish I could've met you in better circumstances, but my name is Steve. And I'm your father.