How widespread is the use of the PEP/8 assembly simulator in education?
At Colorado State University we teach the LC3 assembly language. A quick search for LC3 assembly language shows links to courses at multiple universities. Our course is normally taken by students in the second year and has three primary subject areas.


C language - students already have at least two semesters with Java, so the programs are more advanced, frequently including an assembler and/or simulator for the LC3.
Assembly language - students learn the assembly and write programs for 16 bit floating point math and learn how the run time stack is used in function calls (commonly in the context of a recursive function).
Hardware - students study hardware using Logisim. They commonly design some of the control for the LC3 machine.


In looking at other schools, I have found several that use subset of MIPS. I hope that helps