I see a sidecoin as an altcoin, but with an interesting bootstrap method.
The peg is not really possible, unless there is a full reserve, that is, the bitcoins are paralyzed while the corresponding sidecoins exist. Forget about independent coin creation in the sidechain aka govcoin. That makes the new sidecoins unbacked, and the peg fails.
The bitcoins are always 'locked in' or paralysed as you put it when transferred to a sidechain. But the peg can be whatever the sidechain wants it to be. It can be fixed or it can float. If it floats then the chain is still backed to a degree by bitcoins, but that backing floats depending upon the value of the side chain coin relative to bitcoin.
No it must be fixed. Else it would be an oxymoron. A floating peg? Absurd.