1. Cut pickles into 1/4-inch-thick slices. Make 4 lengthwise slits in each chile pepper, keeping stem end intact. Layer pickle slices alternately with peppers in pickle jar.
2. Gradually add sugar, tapping bottom of jar gently on a flat surface to allow sugar to settle in jar. Add vinegar. Cover with lid, and let stand at room temperature 1 hour, shaking jar occasionally. Chill 8 hours, shaking jar occasionally to ensure even chile pepper heat distribution. Store in refrigerator up to 2 weeks.
*2 large jalapeño peppers, sliced, may be substituted.
Note: For testing purposes only, we used Mt. Olive Kosher Dill Pickles.
Sweet No-Cook Pickles: Omit peppers. Cut pickles as directed in Step 1; return to pickle jar. Proceed with recipe as directed.