Pass the Chile
Every time I see a race called the Chile Pepper advertised in my local paper, I have the same reaction:
Chile is the country and chili is the vegetable!
Most dictionaries give the spelling chile as a “variant” of chili, but chili remains the most common American spelling. (The British spell chili with two ls: chilli.)
The word chili comes from a Nahuatl word cilli. It has nothing to do with the country Chile. (For various theories as to where the country got its name, see the Etymology section in the Wikipedia article. Link below.)
Spelling the country (Chile) one way and the edible (chili) another seems to me to serve a useful purpose.
As the U. S. Hispanic population grows and as more Americans learn even a little Spanish, the Spanish spelling may come to “look right” to more and more people. Time will tell.
NOTE: Some may argue that the chili pepper is not a vegetable, but a spice. Certainly that is how we use it, but the chili pepper belongs to the same plant family as tomatoes and potatoes.
Etymology of the name of the country Chile
See this article at YaleGlobal Online for all you could ever want to know about chili peppers.