Horribly coached game.
Like you say, you have to kick the FG and get those first points. That's an old Bill Parcells principle. The longer it takes to get those first points, the harder it becomes.
Then on the first drive of the second half, down 29-0 or whatever it was, they PUNT from the Seattle 40. What?! It's the fucking SB, you're losing by 4+ scores, and you have barely two quarters left to get it. I'm pretty sure Peyton was expecting it to be four down territory, because he audibled to a draw play if i'm not mistaken on third down & long, and his body language was not good when the punt team came on the field.
36-0, Denver scores, he goes for two. Why? Going for two does nothing for you in terms of scores needed. And had they not made it, it kills the positive vibes you just got from finally scoring.
I didn't have a major problem with the bad challenge from the timeout perspective because first half timeouts are essentially useless, but anybody in the booth could have told him it was a waste of time.