When P&S explain Wilson's method of integrating out high momenta they start from the Euclidean path integral of the $\phi^4$-theory (eq. (12.3)) and then define in the following:
$$\hat{\phi}(k):= \begin{cases} \phi(k)\hspace{1cm}\text{ for } b\Lambda\leq \lvert k\rvert < \Lambda,\\ 0\hspace{1.55cm}\text{ otherwise,} \end{cases} $$ where $b<1$ is some fraction and furthermore introduce some new $\phi$ like $$\phi(k):= \begin{cases} 0\hspace{1cm}\text{ for } b\Lambda\leq \lvert k\rvert\\ \phi(k)\hspace{0.5cm}\text{for } \lvert k\rvert< b\Lambda. \end{cases} $$ Then the (Euclidean) Lagrangian of the $\phi^4$-theory is expanded in the newly defined quantities (which is equivalent with a replacement of the old $\phi$ by new $\phi + \hat{\phi}$):
$$\begin{align}Z =&\int \mathcal{D}\phi e^{-\int {\cal L}(\phi)}\cr &\times\int\mathcal{D}\hat{\phi}\exp\left(-\int d^dx\left[\frac{1}{2}(\partial\hat{\phi})^2 + \frac{m^2}{2}\hat{\phi}^2 + \lambda (\ldots \frac{1}{4}\phi^2\hat{\phi}^2 + \ldots)\right]\right).\end{align} \tag{12.5}$$
On top of the quartic terms in $Z$ also the term $\frac{1}{2}m^2\hat{\phi}^2$ will be treated as perturbation. Therefore as unperturbed Lagrangian ${\cal L}_0$ one has
$$\int {\cal L}_0 = \frac{1}{2}\int_{b\lambda\leq |k|<\Lambda} \frac{d^dk}{(2\pi)^d} \hat{\phi}^\ast(k)k^2 \hat{\phi}(k)\tag{12.7}.$$
In the next step P&S introduce a "problem-adapted" propagator (actually I don't know how to write a Wick contraction which is used by P&S, instead I use an "overline"):
$$\overline{\hat{\phi}(k)\hat{\phi}(p)}:= \frac{\int\mathcal{D}\hat{\phi} e^{-\int {\cal L}_0}\hat{\phi}(k)\hat{\phi}(p)}{\int\mathcal{D}\hat{\phi} e^{-\int {\cal L}_0}}=\frac{1}{k^2}(2\pi)^d\delta^{(d)}(k+p)\Theta(k) \tag{12.8}$$ where $$\Theta(k):= \begin{cases} 1\hspace{1cm}\text{ for } b\Lambda\leq \lvert k\rvert < \Lambda,\\ 0\hspace{1.55cm}\text{ otherwise.} \end{cases} \tag{12.9} $$
Here is my 1. question: How is the (very) RHS $\sim \Theta(k)$ of the propagator obtained?
P&S then proceed with the "integration out" of the term $\sim \phi^2\overline{\hat{\phi}\hat{\phi}}$, i.e. the evaluation of the term:
$$-\int d^dx\frac{\lambda}{4}\phi^2 \overline{\hat{\phi}\hat{\phi}}.\tag{12.10}$$
Here comes my 2. question: Apparently this term is "kind of" part of the exponentiated Lagrangian in the path integral (12.5), however, I have no clue how to get such a term for the following reasons: According to the definition of the propagator the contraction happens with Fourier components of $\hat{\phi}$ whereas in the exponentiated Lagrangian $\hat{\phi}:=\hat{\phi}(x)$. Actually, I have no problem of using Fourier components (instead of $\hat{\phi}(x)$) as long as the concerned term is quadratic since the Plancherel theorem can be used to transform the position space integral in a momentum space integral. However, in case of a quartic term like $\phi^2\overline{\hat{\phi}\hat{\phi}}$ I have no idea. In top of it how to get/generate the term
$$\int\mathcal{D}\hat{\phi}e^{-\int {\cal L}_0} \text{?}$$
which has to be in the denominator according to the definition of the propagator.
Actually my doubts already start at the generating functional of the $\phi^4$-theory when it is expressed in Fourier functional space (this is the P&S formula (12.1)). In order to make any sense of such an integral the exponentiated action should also be an integral over Fourier space with a Lagrangian composed of Fourier components of $\phi$. Again, as long as it is the free K-G-theory, I have no problem with it, however, how to change the $\phi^4$ term in the interacting theory into the $\phi^4$ term composed of Fourier components, I have no idea.