We must consider the whole scope of scripture and avoid building a doctrine a a few isolated verses.
1 Pet 1:1,
Peter, an apostle of Jesus Christ, to the strangers scattered throughout Pontus, Galatia, Cappadocia, Asia, and Bithynia,
1 Pet 2:11-12,
11 Dearly beloved, I beseech [you] as strangers and pilgrims, abstain from fleshly lusts, which war against the soul;
12 Having your conversation honest among the Gentiles: that, whereas they speak against you as evildoers, they may by [your] good works, which they shall behold, glorify God in the day of visitation.
Peter was talking to born again Jews. He used language and images with which they would be especially familiar. There are places in the OT where God called Israel, a chosen people, a peculiar people and that they'd be a nation of priests. But, since the mystery was hidden in the OT, they can't be talking about the church.
Paul, who received the mystery, never calls born again people priests.