Going into the past has lots of problems, notably the urge to draw distinct connections between characters, in essence retconning. The seminal season two episode "Peter" tells the complete story of how Walter stole Peter from the other universe and doesn't introduce anything contrary to our assumptions.
"Subject 13," however, shows us that Peter and Olivia knew each other as children, and not just in a passing moment since they talk and hang out for a while. And not just that, Peter knows he's from the other universe, making a big fuss about it. In present time, it's weird and confusing to look at these characters and realize they'd already met and were friendly. The writers have to chalk it up to, "Oh, both Peter and Olivia forgot their entire childhoods," which is ridiculous unless we see Walter wiping their memories. I guess the writers want to create some kind of cosmic connection between Peter and Olivia, spanning time and universes, but it's too hokey for me to buy.
But aside from that, "Subject 13" is a fantastic episode, as we see exactly what Walter was up to in Jacksonville, how important Olivia is, and how her abusive stepfather stimulated her to crossover. And in crossing over, Olivia handed her sketchbook to Walternate, cluing him in to another universe. The highlight of the episode is the acting. The kids are great, John Noble was great as usual, and Orla Brady was out of the world, with her wonderfully nuanced performance as Elizabeth, who is deeply troubled the entire episode.
It's a real shame Fringe has to air opposite Supernatural, because as good as "Subject 13" was, nothing could even touch Supernatural's ultimate meta episode.