In a blender or food processor, place the jalapenos, half of the green peppers and 1/2 cup vinegar; cover and process until pureed. Transfer to a large Dutch oven.
Repeat with remaining green peppers and another 1/2 cup vinegar. Add the sugar, cayenne and remaining vinegar to pan. Bring to a rolling boil over high heat, stirring constantly. Quickly stir in pectin. Return to a rolling boil; boil for 1 minute, stirring constantly.
Remove from heat; skim off foam. Add food coloring if desired. Carefully ladle hot mixture into hot half-pint jars, leaving 1/4-in. headspace. Remove air bubbles; wipe rims and adjust lids.
Process for 10 minutes in a boiling-water canner. Serve over cream cheese with crackers if desired.