Academic Honesty for Teaching Staffs (Case Study)
I will assume that Peter's research proposal was used internally only.

It seems Susan did some slightly fancy juggling.  Unless Peter's university policies say otherwise, I don't think anyone would get in trouble for this.  Peter's options (not all mutually exclusive), as I see them:


He could let it be water under the bridge, reasoning that research proposals often undergo substantial changes before a project is completed and published
He could choose to avoid working with Susan long term
He could continue to work with Susan, but plan to be on the lookout in case Susan tries to cut any corners in future in projects he is involved with
He could have a frank, respectful conversation with Susan, share his concerns, and listen to her point of view
He could meet with the director of graduate studies in his department, share his proposal and the published paper, and ask if there is a problem


I have no personal opinion about what option(s) Peter should choose.

Now, your question:


  Most of the guidelines for Academic Honesty are for students only.  Can I assume all teaching staff understood these guidelines when they were students?


This question is really not clear to me at all.  Assume that all teaching staff understood which guidelines when they were students?

Please edit the post to make the question part clearer.

(I'm posting this as an answer rather than a comment because I needed more space for my bulleted list of options.  Even though you didn't ask what Peter's options are, I guessed that this list might be helpful for you.)