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
"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.