Hey bhu, you're going to like this one: I am making pepper ice cream with pepper sugar cookies to go with it. I used an ice cream base, and then added jellied lemondrop and jalapeno peppers. To jelly them, I halved them and seeded them, then cooked them for a brief period in vodka to get rid of some capsaisin (otherwise it would have been as hot as a typical very spicy hot sauce, lemondrops are almost as hot as habaneros), then I shopped them up and put them in a pot with some simple syrup forming. Cooked that down to a jelly level, and drained it (don't worry, I kept the jelly), then added it straight to the base.
For the cookies: I made Kris Kringles, only instead of wheat flour i used 1/2 corn flour and 1/2 bread flour (to make up for the gluten loss), and instead of candied cherries I used candied bell peppers. Instead of sugar on the outside, I used cornmeal. To candy the peppers here, I did the same thing as I did for the hot ones, except without the vodka bath. Cook it to a soft ball stage I think, whatever feels right.
The cookie batter tastes mighty fine, and the ice cream base tastes even mightier finer.