Character Analysis
You rarely see one of these siblings in the trilogy without the other one being there, too. Hazel—a character O'Neill created just to create a little added tension between Orin and Lavinia—and Peter—who's loosely based on Pylades, cousin and friend to Orestes in The Oresteia—are two siblings from the upper-crust of the New England town where the Mannons live.
Peter's an old chum of Orin's who served with him in the war, recently discharged because of a minor wound, and who has a serious thing for Lavinia. Hazel, who stayed at home pining, is an old pal of Lavinia's who also happens to have a major thing for Orin.
Whenever the Niles siblings show up, it's usually an opportunity for conversations to stop or for the attitudes of other characters to change, which means that O'Neill basically uses them to keep tension building and to heighten the drama by prolonging discussions about juicy topics like just what is going in with Christine and Brant.
Along with that, we see enough of them to know that they're everything Orin and Lavinia aren't. They seem happy, healthy, to genuinely care for each other, and to genuinely love their parents. Hazel and Peter represent what a normal sibling relationship and family dynamic should look like. They bring some fresh air to this closed, suffocating family; when they're around it's easier to see how warped the Mannons really are.
In The Hunted, it seems like Hazel has a decent shot at getting engaged to Orin, even though Christine's just giving Hazel hope in order to keep Orin away from Lavinia. Once we've reached The Haunted, Peter still hopes to win Lavinia's affections even though she refuses to let Orin out of her sight for a second. Both of them are bound to be disappointed, which is probably all for the best. They're both sensible enough to recognize a sick situation when they see it, and to get out.