Wildlife experts in India have successfully used ghost peppers to halt wild elephants from approaching homes and crops. The fiery fruits rank as the hottest peppers in the world in the book of Guinness World Records, and the mere smell of them can keep the floppy-eared behemoths from crossing them [source: Hussain].
Did the Aztecs stumble upon a similar effect with submerged peppers? First, let's figure out where that zing comes from.
Jalapenos, habaneros, bell, ghost and the many cousins in between are all fruits in the Capsicum plant family. The unique thing about Capsicum fruits is that creeping heat they bestow on your lips and tongue when you eat them. But why can you eat a whole bell pepper without hint of hot, and a drop of habanero juice on the tongue can send you running for the fire station? It depends on the amount of "active ingredient" in Capsicum peppers: a chemical called capsaicin. In your mouth, it causes the burn. When released into the air and inhaled, capsaicin burns and stings. As with the situation with elephants in India, the Aztecs most likely hung the chilies from their canoes because they believed that the burning sensation would repel sharks.
But the location of the capsaicin is inside of peppers -- not on the outside -- so that pokes some holes in Aztec theory. When you slice open a pepper, you find the capsaicin glands between the colored flesh (yellow, green, red or orange, depending on the variety) and the placenta, or the mealy, whitish part you usually slice off before eating. That said, stringing peppers behind a boat might only do as much good as a pelting a shark with them.