I think it really depends on the style, the individual, and on what you mean by "peak" physical fitness. I mean, I don't think you can or should expect a 60-year old Tai Chi student with arthritis to have the same level of fitness as a 20-year old BJJ student trying to be UFC fighter!
I
do think people should be challenged during their dan test, both in mind and body. I think that they should be in good enough shape that they can do the art well for a prolonged period, whatever that means in the context of the art.
When we do our first dan test (this winter, yeah!) we're going to have everyone run or jog a mile before they can test, which I think is a pretty basic standard of fitness. So I think, people should have
some level of fitness, but I'm not willing to say that martial artists need to be trim and muscular and be able to run 10 miles.