It appears others have had the same issue with tethering in Ubuntu 11.04 (PeppermintOS 2 is based on 11.04) where it worked perfectly in earlier releases … see here:
http://ubuntuforums.org/showthread.php?t=1758630
It would appear that some people have fixed the issue by moving to kernel 3.1.4
If you want to try kernel 3.1.4 …
cd ~
then
mkdir kernel-3.1.4
then
cd ~/kernel-3.1.4
then
wget http://kernel.ubuntu.com/~kernel-ppa/mainline/v3.1.4-oneiric/linux-headers-3.1.4-030104_3.1.4-030104.201111281851_all.deb
Next you need to use wget to download 2 more files, BUT they are architecture dependant … so ONLY get EITHER the 32bit OR 64bit version, depending on whether you have 32bit PepperiintOS or 64bit Peppermint installed.
For 32bit PeppermintOS
wget http://kernel.ubuntu.com/~kernel-ppa/mainline/v3.1.4-oneiric/linux-headers-3.1.4-030104-generic_3.1.4-030104.201111281851_i386.deb
then
wget http://kernel.ubuntu.com/~kernel-ppa/mainline/v3.1.4-oneiric/linux-image-3.1.4-030104-generic_3.1.4-030104.201111281851_i386.deb
OR
For 64bit PeppermintOS
wget http://kernel.ubuntu.com/~kernel-ppa/mainline/v3.1.4-oneiric/linux-headers-3.1.4-030104-generic_3.1.4-030104.201111281851_amd64.deb
then
wget http://kernel.ubuntu.com/~kernel-ppa/mainline/v3.1.4-oneiric/linux-image-3.1.4-030104-generic_3.1.4-030104.201111281851_amd64.deb
Now to install the kernel, just run:
sudo dpkg -i *.deb
Be SURE to wait till that last command returns you to an $ prompt (it may take a short while, it says “done” twice, but it isn’t finished till it dumps you at a normal $ prompt) … then reboot … once rebooted, run:
uname -r
if
3.1.4-030104-generic
is returned … you are now using kernel 3.1.4 … so try tethering now.
If you are unsure whether you are CURRENTLY using 32bit or 64bit Peppermint … send the output from:
uname -srp
And just so you feel more confident … you are NOT uninstalling the old kernel, so if anything goes wrong, there’s nothing stopping you from booting to the older kernel from the GRUB menu.
And I’ve just tested these instructions on my AA1 running 32bit PeppermintOS (Two), and it seems quite happy with kernel 3.1.4 
As usual … any questions … ask them first 