MELT butter in heavy saucepan on low heat. Add marshmallows; stir until melted and smooth. Remove from heat.
ADD broken pretzel sticks; mix lightly until well coated. Drop by rounded tablespoonfuls onto greased baking sheet.
MELT caramels with water in heavy saucepan on low heat, stirring frequently until smooth. Add peanut butter; mix well. Drizzle over treats; cool.