Whether or not this response to Dr. Peters's argument is of consequence, I hope I avoid the mistake of letting it be consequence-driven. I have hesitated to comment in public on Dr. Peters's article, because my expertise is elsewhere. I offer this response in the spirit of collegial dialogue, not as the last word, and, as I have previously stated, as an act of fraternal service to those most disturbed by the current fracas.
Canon 277 reads thus: "§1. Clerics are obliged to observe perfect and perpetual continence for the sake of the kingdom of heaven and therefore are bound to celibacy which is a special gift of God by which sacred ministers can adhere more easily to Christ with an undivided heart and are able to dedicate themselves more freely to the service of God and humanity. §2. Clerics are to behave with due prudence towards persons whose company can endanger their obligation to observe continence or give rise to scandal among the faithful. §3. The diocesan bishop is competent to establish more specific norms concerning this matter and to pass judgment in particular cases concerning the observance of this obligation."
Dr. Peters's argument about Canon 277 hinges on whether "continence" and "celibacy" are two separate obligations on the clergy, or two aspects of one single obligation. If they are two separate obligations, then I can't refute his conclusion that only the obligation of celibacy is removed for married clergy. (Someone else more versed in canonical argumentation that I might still do so, but to my knowledge, no one has.) But if they are together one single obligation, then permitting a married man to receive Holy Orders as priest or deacon removes together both parts of the one obligation.
Here are some reasons one could argue that the latter option is the correct one:
(1) Since this article appeared in 2005, Pope Benedict XVI has written the Apostolic Constitution Anglicanorum Coetibus. One of the canonical provisions of this document reads thus: "VI. § 1. Those who ministered as Anglican deacons, priests, or bishops, and who fulfil the requisites established by canon law and are not impeded by irregularities or other impediments may be accepted by the Ordinary as candidates for Holy Orders in the Catholic Church. In the case of married ministers, the norms established in the Encyclical Letter of Pope Paul VI Sacerdotalis coelibatus, n. 42 and in the Statement In June are to be observed. Unmarried ministers must submit to the norm of clerical celibacy of CIC can. 277, §1 [see above]. § 2. The Ordinary, in full observance of the discipline of celibate clergy in the Latin Church, as a rule (pro regula) will admit only celibate men to the order of presbyter. He may also petition the Roman Pontiff, as a derogation from can. 277, §1, for the admission of married men to the order of presbyter on a case by case basis, according to objective criteria approved by the Holy See."
Notice here two things. First, Pope Benedict identifies the core of Canon 277.1 in the "norm of clerical celibacy," not the norm of perfect clerical continence, to which celibacy is ordered as a secondary good, as Dr. Peters argued. Second, the permission for married former Anglican clerics to be ordained as married Catholic priests or deacons includes a formal "derogation from" Canon 277.1 -- that is, one single derogation, as from one single obligation.
(2) The encyclical of Pope Paul VI referenced above, Sacerdotalis Coelibatus, consistently uses the term "celibacy" for both the concepts of celibacy and clerical continence. Only in #34 does the term "continence" show up, where it is taken from another source (namely, Perfectae Caritatis #12, wherein it is used interchangeably with "chastity"), and in the context of this section of the document seems equivalent to "celibacy."
So one might conclude that Pope Paul VI also thought "celibacy" and "continence" to be aspects of one single obligation or commitment of clergy.
(3) If that's true, then in permitting married men to be ordained to the diaconate, Pope Paul VI did in fact exempt them from both celibacy and continence together, in his motu proprio Sacrum Diaconatus Ordinem: "Therefore, in the first place, all that is decreed in the Code of Canon Law about the rights and obligations of deacons, whether these rights and obligations be common to all clerics, or proper to deacons--all these, unless some other disposition has been made-- we confirm and declare to be in force also for those who will remain permanently in the diaconate. In regard to these we moreover decree the following...." Rather than finding celibacy in what followed (#2, 11), and continence in what remained, both together are exempted for married men in what followed.
(4) Pope John Paul II also used "continence," "celibacy," and "virginity" interchangeably in his Theology of the Body audiences. (See especially Audiences #74-77, on interpreting Mt 19:10.) Granted this is not any kind of canonical or quasi-canonical source, but it's consistent with his predecessor and successor, and I would not be surprised, if one went looking, to find it in suitable canonical sources also.
I note, finally, that this argument makes rather more sense of the past four decades of Latin practice than the "two obligations" argument. Dr. Peters's conclusion implies a very serious discrepancy between law and recent practice. But this conclusion implies that recent practice is consistent with the law as written.
Therefore, I am lead to conclude (at least tentatively), Popes Paul VI, John Paul II, and Benedict XVI have all understood Canon 277.1 to involve one obligation, that of continence-and-celibacy, and not two separate obligations. In permitting married men to be ordained, both aspects of the one obligation are removed together.
UPDATE - Dr. Peters on the Anglicanorum Coetibus reference to Can. 277. Unfortunately his first point merely begs the question: is it one obligation or two? If one, of course AC is silent on continence as distinct from celibacy, while if two, why is it silent? His second point is technically correct, but I don't see that it actually answers the challenge. Yes, AC only applies to former Anglican clergy, but could it really be the case that there is one interpretation of Can 277 for one group of married clergy, and another for another group? It seems that such a difference would have to be explicitly stated in some canonical document, in order to overcome the presumption that this provision is being established for this group of clergy precisely because the normal interpretation of Can. 277 is "one obligation."