Yep, that's a sore hock, which is actually a pressure sore. The main worry with sore hocks is infection and depth. A severe sore hock will bleed and can go all the way to the bone, damaging muscle and tendons as well as the bone. Infection is a real concern in these cases. However, Pepper's does not look that bad, from what I can tell in the picture. If it looks abraded, like it's about to bleed you can put a triple action antibiotic ointment on it (like Neosporin) 2 - 3 times a day, if you can. Some people use Preparation H on sore hocks or Bag Balm.
Keep the nails trimmed. Long nails make the rabbit lean back more, which increases the pressure on the hocks.
Keep the weight down. Pepper doesn't look chubby to me, though.
Exercise also helps to get blood and nutrients to the effected area as well as keep the weight down.
Carpet can be very abrasive on rabbit feet. You may try lining his "lounge area" with fake sheep skin.
I'm sure others will be able to give you more information. Sore hocks are not uncommon.