The PEPs in this repo are published automatically on the web at http://www.python.org/dev/peps/. To learn more about the purpose of PEPs and how to go about writing a PEP, please start reading at PEP 1 (pep-0001.txt in this repo). Note that PEP 0, the index PEP, is now automatically generated, and not committed to the repo.
Original PEP source should be written in reStructuredText format, which is a constrained version of plaintext, and is described in PEP 12. Older PEPs were often written in a more mildly restricted plaintext format, as described in PEP 9. The pep2html.py processing and installation script knows how to produce the HTML for either PEP format.
For processing reStructuredText format PEPs, you need the docutils package, which is available from PyPI. If you have pip, pip install docutils should install it.
Do not commit changes with bad formatting. To check the formatting of a PEP, use the Makefile. In particular, to generate HTML for PEP 999, your source code should be in pep-0999.txt and the HTML will be generated to pep-0999.html by the command make pep-0999.html. The default Make target generates HTML for all PEPs. If you don't have Make, use the pep2html.py script.