Is it common to have exam questions 'peer reviewed'?
Yes; as mentioned in the UK it is expected that assignments (usually those greater than a certain proportion of the overall mark) is both internally checked and externally checked before being sat by students.

I have acted as an external examiner involved in the checking of the exam papers of another university. It is a valuable role that experienced academics can play in both improving the student experience, and the quality of the learning and teaching of an institution.

Another aspect that is also worth mentioning is post-exam error checking. In my department (some considerable time ago) we did an experiment of random error checking and to our astonishment, discovered that despite the diligence of the most experienced marker, things got missed. Our checking showed up whole missed script pages, ridiculous arithmetic errors in the final score and whole class transcription errors where spreadsheet cells were "off-by-one". As a result more regular clerical checks were done on everyone's marking and result recording to gain much in quality and student satisfaction.