This item does not work with The Lost. Using it will not hurt him, nor produce any Cubes of Meat.
Bone Hearts do not qualify either, and The Forgotten cannot use this item.
Due to it counting as self damage, if used after becoming The Lost by touching the white fire in Downpour II or Dross II, it will kill him.
D4: Every Cube of Meat produced using Potato Peeler counts as an item for rerolling. Because health usually is not removed in rerolling items, this is useful to increase the number of items at the expense of the item pool.
Cubes of Meat created by Potato Peeler will always reroll into Treasure Room items, regardless of where Potato Peeler was obtained or the rooms it was used in.