This lock has an ingenious if not particularly secure mechanism. A tiny locking pin fits into grooves in the pin. A spring loaded telescoping pin setup is locked to the bottom part of the pin in normal operating mode, however when the key is turned 90 degrees clockwise from the locked position and the change tool inserted, the top part of the bottom pin assembly is disengaged from the bottom part of the bottom pin assembly. The old key can be removed, and the desired key can be can be inserted. When the change tool is removed, the locking pins fit into grooves in the bottom pins, and the key can then be turned to the locked position. If the locking pin doesn't precisely line up with the groove, the key can't be turned back.
Interesting enough, there are only 4 possible depths per pin. Since there are 5 pins, this gives 4x4x4x4x4 or 1024 possible keys. Four depths and having the size of the pin determinable with a pick when the lock is locked means that this lock could be decoded.
Here is the pin assembly with the top of the pin locked to the bottom of the pin, plus the assembly that holds the pin assembly during normal operation of the lock.
The pin assembly dissasembled
My two keys, plus the change tool.
I don't have the Peterson bypass too, but I can now understand how it works, so I don't need to have one for myself. There aren't any spools or security pins in this lock, which makes this lock easy to pick. You can indeed change the key yourself though!