Shaun Batt fired the hosts into a 53rd minute lead after dashing into the box and arrowing a low drive past keeper Julian Speroni.
But Posh's lead lasted only 11 minutes as veteran forward Alan Lee turned in a Palace leveller after a Darren Ambrose corner had been headed into his path.
Palace had defensive lynchpin Paddy McCarthy dismissed for a second bookable offence 16 minutes from time. Referee Kevin Friend's patience wore thin after the Irishman dumped Craig Mackail-Smith on the deck.
Posh were only inches away from making their numerical advantage count when the full-stretch Aaron Mclean was agonisingly short of a cross from strike partner Mackail-Smith.
And substitute Charlie Lee came even closer to making a glorious impact when planting a header from a Paul Coutts corner just over with his first touch following his late introduction.
At the other end Palace substitute Ryan Smith flashed a late shot narrowly wide as the Londoners continued to threaten after McCarthy had received his marching orders.
The action-packed second period was a massive improvement on a dull opening 45 minutes when there was little to excite the watching Sky television audience.
Posh began brightly but their early pressure failed to yield a breakthrough despite some excellent deliveries into the box from left-back Tom Williams.
Home keeper Joe Lewis was forced into action in the ninth minute when he kept out a Darren Ambrose free-kick while Posh took until seven minutes before the interval to test Palace stopper Speroni.
But the Argentinian had no problems in dealing with a Mackail-Smith shot on the turn with much of the sting taken out of the effort by a deflection off Shaun Derry.