Aesthetically it just doesn't look right. So what can be done?
There are a few options.
1) extract the tooth and move the teeth behind forward. This is done many times when a child is having orthodontics. The only problem is the tooth behind is usually a larger size than the tooth it is replacing and sometimes it doesn't come out that great. Sometimes it comes out just fine.
2) extract the peg lateral then replace it with an implant.
3) leave the peg lateral in place and just build it up to look like a normal tooth.
I like option 3 although it is not always easy but when done well can give a very nice result.
All the best
Dr Ron Barzilay