In Avengers #503 after the Avengers learned that the Scarlet Witch had gone insane as a result of her reality-altering powers. In her confused stated, she blamed the Avengers for the loss of her children which never existed (she simply willed them into existence). She used her powers to destroy Avengers' mansion and their reputations. They joined forced with Dr. Strange and managed to stop Wanda before any more damage was done. Magneto appeared and took his daughter to Genosha. Iron Man had to ultimately disband the team due to the high financial burden of rebuilding.
However Captain America and Iron Man soon created a new Avengers team. The only notable differences being that they are no longer accountable to any government agency and the members work for free. They were also allowed to live in Stark Tower. This storyline began New Avengers #1.
Some time passed and the question of Wanda's rehabilitation came up. Charles Xavier and Magneto were unsuccessful at restoring her mind and the New Avengers and the X-Men had to decide Wanda's fate. They fly to Genosha to confront her and arrive just int time to witness Wanda using her powers in an unprecedented way. She changes reality to allow mutants to be the dominant species on the planet. Humans are now second class citizens. The heroes' memories have been suppressed and are given their ideal life to keep them from uncovering the truth. This occurred in House Of M #1.
In this world, Peter Parker is still Spider-Man. His is a wrestler, actor, scientist, and philanthropist. Ben Parker, Gwen Stacy, and George Stacy are alive. Peter is married to Gwen and has a son Richie. J. Jonah Jameson and Rhino work for Peter as a verbally abused publicist and bodyguard, respectively.
Peter and Gwen have recently bought out Osborn Industries to stop the manufacture of his chemical weapons. Norman Osborn is not happy with this development.
A masked character calling himself the Green Goblin has allied himself with Jonah to bring the world crashing down around Peter Parker, by providing him with Peter's journal that he kept as a teenager. Initially thought to be missing, Jonah reappears on television and reveals that Peter is actually a homo sapien, not a mutant.
A mutant anchor for Action 3 news begins to report on the top story of the evening: beloved Peter Parker is a not a mutant. The reporter paraphrases the contents of his journal: Parker was bitten by a spider that granted his powers; he is not the mutant that he's claimed to be all along.
The repercussions from this have not been good. Parker's latest movie has been pulled from theaters. His company's stock prices are plummeting. His contract with local law enforcement to use his web-shooters as non-lethal weapons has been canceled. Rhino accidentally injured Parker's wrestling partner Crusher Hogan (who uses the alias Green Goblin) while inquiring into Jonah's disappearance. To make matters even worse, a boy in Manhattan was severely beaten for wearing a Spider-Man t-shirt.
The reporter turns back to Jonah who is grinning from ear to ear. He ignores her question of how he obtained this and begins to read aloud an embarrassing passage about Peter making out with his pillow, pretending that it was Liz Allan.
Peter has put on a disguise intending to visit Crusher in the hospital when he sees this report. He is delayed because the doctor is able to recognize him. She contacts security to handle this matter discretely. When she finished explaining the situation to Giarusso a mutant guard, Peter has disappeared. Giarusso quickly finds him, sans disguise, in the assaulted boy's room. The child is unconscious. Giarusso asks what he's doing here. A despondent Peter responds that he stopped in to see his last fan. Giarusso goes with his gut instinct and allows Peter to sit with him until the end of his shift.
He asks Peter what happened to him. Peter recounts the recent events. Giarusso reiterates, what happened to him? He was on top of the world, experienced some setbacks, and he acts like a whipped dog? Peter reminds him of the treatment of regular humans in this world. Giarusso provides some encouragement by saying that while he never liked humans, he always admired Peter.
When Giarusso's supervisor calls for him in the hallway, Peter hides on the ceiling while Giarusso answers. Peter overhears him being told to get his riot gear together because the Rhino is causing massive destruction in Times Square. When Giarusso turns around, the window is open. He smiles and says aloud, "Good. Stop whining and do something".
When Peter arrives, Rhino is throwing cars around. He's confused and angry over his involvement with the injuries he accidentally caused to Crusher. Peter restrains him with his webbing and tries to explain the situation. They're interrupted by the crowd who begin to throw produce at him. While the crowd is focused on him, Rhino escapes.
Later on Rhino is met by the Green Goblin who wants his help in completing what he started with Parker. In exchange for helping him, he'll fix his legal issues. Rhino tells him to meet him behind Parker's house tonight.
Even later than evening, Peter returns to his estate and admits the truth to Aunt May, Uncle Ben, George Stacy, and Gwen. This immediately begins an argument between George and Ben over living a lie in order to get ahead (George) versus doing what he can to provide for his family in a bigoted class-conscious society (Ben). Unable to handle a family argument on top of everything else, he tells Gwen he's going to be alone for a while.
Gwen's reached her breaking point. She screams at them to stop arguing. This is not the time to engage in this kind of discussion while Peter's life is crumbling. She hands Richie to May and begins to look for Peter.
Later the Goblin arrives at the Parker estate. He finds Rhino standing in the middle of a darkened aircraft hanger, illuminated by a single light. Once inside Rhino introduces the Goblin to some of his old friends: Ox, Vulture, and Electro. Rhino introduced them to the guy "who cost me the best life I could have hoped for." With their combined powers, they try to kill the Goblin.
During the fight, Gwen hears the noise and investigates. She arrives just as they have captured the Goblin. Rhino yells for someone to take off his mask. Gwen walks over and removes the mask to reveal the face of Peter Parker.
In this reality Peter is Spider-Man and the Green Goblin. Ok that's just a giant bag of weird. I know that Waid and Peyer wouldn't pull a stunt like this without good reason, so we'll wait next issue for the explanation.
4 webs. The logical backlash of the truth is now shown. You feel truly sorry for Peter but at the same time, you wonder exactly how much worse this is going to get. The twist at the end is very surprising and provides a new plot element that will no doubt have significant repercussions.