The secret's when you go north through the wall of the spot south of the northeastern corner.  When you walk through the wall, you'll find an old man who gives you 100 Rupees (or the bait / key / blue ring shop in the 2nd quest).  That's what I thought the old man was referring to.  I never considered the letter-to-the-old-woman to be a secret; the cave's easily accessable walking up the ladder.

And besides; the screen with the hidden 100 rupee cave IS a peninsula.  It's surrounded by water on three sides.  =)

(The Legend of Zelda for the NES if you have no idea what I'm talking about).

Oh, and to top it off, 'Aquamentus' is the boss of level 1, which is where the old man tells you about the secret on the easternmost peninsula.