You need a better measurement of the seatpost diameter, which your LBS can do. After that, it should be easy to get a seatpost of the required diameter. Your LBS can order one, which is the route I think you should take, because if the new post doesn't fit, they will take care of getting the correct part or honing the frame. If it is an unusual diameter, like 25.0 mm, or an unusual seatpost type, like a quill seatpost, then it will take a little more looking. But generally it isn't especially hard to get a seatpost for a Peugeot.

However, if you really need a full inch of additional setback, beyond what you already have, that may limit the selection of seatpost quite a bit. You may want to instead, or also, use a different saddle with longer rails. Don't worry about having the saddle all the way back on the rails.

Yes, you can sand down a seatpost, but only a little. Like 0.3 mm or something similar. Going from 27.2 mm to 25.4 mm would be too much sanding to be practical, and maybe more than would be safe.

What model Peugeot? Picture?