You cannot make good hummus from canned chickpeas, you should make it from fresh dried beans
The beans need plenty of soaking and rinsing
When cooking, add one tsp of baking soda per cup of beans. Baking soda chemically softens the bean proteins. Never add salt or other flavourings during the bean cooking stage
Traditional hummus is somewhat coarse, but very soft (due to baking soda). It is made with a minimal amount of olive oil, but drizzled with olive oil and a sprinkle of cooked, and still warm chick peas when served
Restaurant hummus is often just over processed junk made in a factory with a commercial grinder (like a peanut butter grinder)
Also, see How should I prepare dried chickpeas? if your chickpeas never go soft
In Israel I have often seen hummus/falafel/thina served with a hot sauce called skhug, I have mostly seen the green variety (skhug yarok), which is a sauce made of fresh herbs, garlic, chili, lemon juice, garlic, olive oil, and some spices.
Hummus is often just served with thina on the side and with olive oil, but there is a lot of variety ... I have seen sauces based on olive oil and lemon juice, similar to what you describe (although not biter ... but the bitterness could also come from blending the olive oil). But I never saw it being prepared in front of me or it being called a particular name, but it looked a little like a thin vinaigrette.
Using my extremely limited hebrew knowledge and google I found this recipe.
The ingredients translate to:
2 hot chilies
3-4 cloves of garlic
3 tbsp olive oil
juice of half a lemon
salt
additional recomendation:
1 tsp cumin
sugar
Preparation: Put all ingredients into the food processor and turn into the sauce. Taste and adjust spices/oil/lemon juice to taste. And add sugar if too sour to balance the flavor.
You can let sit a little for the flavors to combine ... and strain out remaining bits if desired.
I am not sure if this is the sauce that you had ... but it could be very similar. Anyway ... it sounds tasty.
Best Answer
Yes. Make it again and don't add horseradish. I'm totally serious - no traditional hummus recipe in the known universe has horseradish in it. There is nothing you are going to be able to do to your existing batch to remove that flavor, other than diluting it, but I don't think you'd be able to dilute it enough to be worth the effort.