Toning down the fresh chilli picquancy

When I buy hot chilies, I look for firm, uniformly bright (or dark, depending on the type) green specimens. Unless I'm in a big hurry, I pick through the pile and choose them individually. I avoid any that are soft, discolored (including the ends), missing caps (the part that attaches to the stem -- they spoil faster after this is removed), wrinkly or otherwise look damaged or old.

If your store doesn't have any that look bright green, crisp and plump, try to find a new place to buy them, or just buy them in smaller quantities and get the least disreputable specimens and use them immediately.

You want to buy chilies from a place that has a high turnover on them and most supermarket produce sections don't really do that much business in hot peppers, so they tend to sit for a while. My favorite place to buy green chilies is at Indian markets (the busier, the better for turnover), second favorite is other Asian food markets, then other specialty markets from places that like spicy food, then farmers' markets, then a long way down the list, regular grocery stores.

When I get them home, I clean them off by hand (remove any stray leaves or any bad ones I accidentally missed, etc) and put them in the fridge in a lightly closed baggie. If I bought a large amount (or if I happen to be growing them and have a lot ripe at once), I will sometimes freeze them. I have a small bag of frozen habaneros at home right now. The texture is most definitely affected by freezing, but the flavor isn't (unless you keep them so long that they get freezer-burned), so if you are planning to cook with them, freezing is perfectly fine.

I usually don't wash them before storing, just pick them over. I wash them just before using them, whether I get them from the garden, the store, the fridge or the freezer.

If I have chilies I'm not sure about, I do smell and taste them to see if they are ok. If they feel/smell/taste weird, I don't put them in the dish. I'd rather replace green chilies with red pepper powder instead of using something iffy.

You'll sometimes hear television cooking show hosts describe what they're doing as "cooking out" the paste. What they're actually doing is altering the flavor of the chili itself, not manipulating the level of capsaicin that was introduced. If you take a typical chili paste which has been combined with garlic and other things and then saute it in a fat, you will lower the level of heat that's tasted (and possibly take some bitterness out, depending on the chili and what's in the paste), but not lower the level that's actually ingested.

If you literally want to cook it out, put some sliced chili with nothing else in a searing hot pan, but make sure no one else is home or going to be home for a while, and wear a respirator. The capsaicin has nowhere to go and vaporizes as it burns (seriously, don't do that, if you did that in my kitchen I'd throw a live crab at you).

Various kinds of fat bond well with the capsaicin, essentially creating a sort of encasement. To demonstrate how this works, grab some sriracha and some cream. Mix in about half a tablespoon of sriracha to about 300 ml of cream, taste it. Now, simmer the cream a bit (about 3 - 5 minutes), take it off the heat, let it rest a few minutes and taste it again. The level of sriracha didn't change, what happened is the cream got its hands on the capsaicin that it contained. It'll continue to get milder the longer it sits. That's why a glass of milk can rescue you from atomic hot wings and why water just broadens the pain as it makes sure your whole palate gets a chance to taste it :) Beer just makes you care less about it.

Now, sugar has the remarkable quality of helping to hide heat with its mighty right of first refusal when it comes to your palate. The heat from the chili shows up and your palate says "what? I'm too busy with this sweet, I can only listen to a little of you". To see how that works, repeat the experiment again, but this time throw a teaspoon or so of confectioner's (or castor) sugar into the cream with the sriracha, along with an additional squirt or two (around 10 ml) of sriracha. That's why coconut milk works so perfectly in a curry.

The best bet for your recipe is finding a way to get some kind of fat into it. That could be coconut milk, fatty bacon, or whatever makes sense based on how you want to serve it. Then, optionally, sweeten it up a bit (also remember that citrus helps offset sweet, handy to keep that in mind when you're 'fixing' a dish) - some raisins sound like they'd work rather well with what you're doing. Maybe go with coconut milk and raisins, and thin it out with a bit of chicken stock if needed?

I really try to encourage people to take an hour and just experiment with ways you can alter and sort of control chili, because it is a lovely thing to cook with. Just remember, whatever you put in the pan initially ends up being eaten, you're just hiding a bit of that as you cook.