I think the Peter Principle actually doesn't apply to hyper competent people because we get the "You're too valuable in your current position" treatment and therefore aren't given the opportunity to rise at all.
By some interpretations, it sounds like it means that people who are incompetent used to be competent before they were promoted into their current position... But in fact, because the super-competent candidates are locked into their low positions, it ensures that the pool of candidates who are selected for promotion consists mostly of moderately incompetent people... Kind of like "I like this person and they are OK in their current position but maybe if we promoted them, we'll get that spark going..." But, surprise surprise, they never attain excellence.
I don't know that it's about being "hyper competent" so much as it's about being competent in a niche position that is incredibly hard to fill. I think after a while you could argue that that person is indeed "hyper competent", but the situation actually starts before that point.
By some interpretations, it sounds like it means that people who are incompetent used to be competent before they were promoted into their current position... But in fact, because the super-competent candidates are locked into their low positions, it ensures that the pool of candidates who are selected for promotion consists mostly of moderately incompetent people... Kind of like "I like this person and they are OK in their current position but maybe if we promoted them, we'll get that spark going..." But, surprise surprise, they never attain excellence.