I agree with you that the writers made a mistake. But, even if they meant that he didn't survive past childhood (which is not what they said, they said he never existed), then how is there a Henry and with no Henry then there is no DNA to help Walternate start up his side's machine.
As I said with my previous posts, you can just keep going on and on about how this negates WAY too much of the past storyline.
However, it also makes abudantly clear that Peter is the lynch pin of the entire tale.
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SEASON 4: EPISODE 4 – AIRS: 10/14/2011
EPISODE TITLE: SUBJECT 9
EPISODE SYNOPSIS:Walter is forced to leave the lab for the first time in years when he and Olivia go to Massive Dynamic to examine files that may connect one of Walter's Cortexiphan test subjects to a new series of crimes