Which may have started the conversation, but Jim Steinmann wrote the song, not Meatloaf, and he literally answered the question at the end of the song:Meatloaf has confirmed in an interview that the "that" was pegging
Edit: https://waterfordwhispersnews.com/2017/05/05/meatloaf-confirms-but-i-wont-do-that-was-a-strap-on/
"I know the territory, I've been around
It'll all turn to dust and we'll all fall down
Sooner or later you'll be screwing around
I won't do that
No, I won't do that"
Pegging or not, within the context of the song he said he's not going to screw her over just to get laid. It's a sort-of bookend to "Paradise By the Dashboard Light", where the dude will promise the girl anything if she lets him finish.