Employer is changing the org structure to put me in a new role. The new role isn’t the right fit, and is reporting to someone who’s a peer (he hasn’t been promoted). Effectively, I see this as my current role being in eliminated and I’m being forced to take up this other role, or resign. Any suggestions on how I could make them a ‘package offer’ aka severance? Spoke with HR lady she said this isn’t a layoff since they are offering a new role which I’m refusing willfully

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Posting as :
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Just suck at it and put in minimum effort while you job hunt and let them lay you off

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This might be an opportunity to develop another skill set to leverage later. If you can help a peer fit the employers vision there may be untold insight revealed.
The employer will direct this peer differently than in the past and you have a chance to observe.

The peer is 60+ year old man hanging onto a paycheck because his 401k isn’t funded enough for whatever his goal is. Useless guy with a controlling behavior. I’ve been guiding him on what he needs to do for the last few years, and now suddenly this org change because he can’t get shit done, and they want a workhorse under him

Three options:

1. Take the new role and make the most out of it. You'll have new skills and projects to add to your resume.

2. Accept the role just to buy time, while interviewing for a new job.

3. Put in your two week notice.

I think option 2 might be best, since you already seem uninterested in this role.
Also try to negotiate for a raise, see if they value you enough to try to keep you. If they just say no, then you know where you stand with them.

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