My take on Mama Lil's famous sweet-hot pickled peppers.
Slice off the stem ends of the chilis and remove the seed core. A clam or oyster knife is a great tool for the core removal. You don't have to purge every seed, but much of the heat is in the seeds and white pith.
Slice the chilis into rings about 3/8" wide. When you get down to the tip, slice in half. Add all ingredients to a medium saucepan. There should be just enough liquid to cover the chilis if you press down a bit. Don't add extra liquid - you'll have too much as is. Bring just to a boil over medium high heat, stirring to dissolve the sugar and salt, then let cool.
Once cool enough to handle, lift out the chilis with a slotted spoon or similar device and pack into two clean, empty pint jars. Pour most of the liquid into a large measuring cup and distribute the remainder, with the fennel seed dregs, between the two jars. Top off the jars from the measuring cup, seal, and let cool completely or overnight. Unless you have sterilized the the jars and lids, store in the refrigerator. They will keep for many weeks.
Gratuities
This is a very close take on Mama Lil's original style pickled peppers. I was inspired to use the Christmas-colored pepper mix I ran into in the super, but the red ones turned out to be seriously hot. This was OK for my jaded palate, but if you want something like the distinctive "goat horn" peppers that Mama and her clan grow in Oregon, look for a fully ripe (i.e., red) Hungarian wax pepper. You might also check out red poblanos, anaheims and cubanelles, but they will be a bit milder and less fleshy.
Green jalapenos these days tend towards mildness, but the red ones have retained the old-fashioned heat I associate with Road Runner cartoons. I blame sriracha, which is mainly a red jalapeno paste. Maybe only the hot varietals are allowed to ripen.
You might be tempted to cut the peppers into slabs instead of rings, but resist. In slab form, you'll be biting crosswise through the skin. This is very distracting when you're trying to focus on a sandwich.
As a Responsible Adult, I have to tell you that pickles should be stored in the fridge unless the jars have been sterilized. As an observant eater who believes in acquired immunity, I have eaten pickles that have sat around in crocks on a counter for weeks, if not months. Walk your own path.