A quick note on heat: Capsaicin is found in the inner ribs, or veins, of chiles, not just the seeds. To minimize the heat (why you'd ever want to do that, I don't know), remove the ribs with the seeds. And when working with chiles, be careful. The capsaicin in the oils can burn your hands and eyes. Wear gloves when handling the hottest chiles, and work in a well-ventilated area.
Fresh green chiles are fine, though the flavor can be a little underripe and "grassy." Ripe red chiles are the best, though they are generally seasonal, available typically late summer through early fall.