If anything, that works as a great defense of peer review given Einstein was wrong.
Einstein was right about some things and wrong about some things. Which work of Einstein are you referring to when you imply that a peer review could have detected the error in his work?
A bit earlier, the famous anecdote is about Einstein's offence that the Phys Rev editor would dare to send his paper for review at all -- apparently this would not have happened at a German journal of that era: http://www.preposterousuniverse.com/blog/2005/09/16/einstein...