When people think of Mexican food the first thing they usually think of are tacos. Tacos in
Mago (the woman who runs the Taco stand - it's short for Margarita) lays out the limes, salsa, and chopped onions that are typical accompaniements to Taco heaven. However, she also makes a bowl of sliced onions, chopped habaneros, and lime juice. I can't eat very much of it, but just a little bit of it on a taco adds such a nice flavor. One time I did eat too much and thought I might actually die. Pepe still thinks I was being overly dramatic. If you ever do eat something that is too hot for you to handle, the best solution is to suck on a lime (another reason why they are ever present at the Mexican table, the other being that lime juice does a great job of killing any wee-beasties that might be living in your food). You can also consume a dairy product as a way to help ease the pain - don't drink water unless you simply have no other option because it just spreads the acid that causes the burning around in your mouth. However, if you have no other option, holding some cold water in your mouth for a bit and then spitting it out at least provides momentary relief. It always passes though and you learn one hell of a lesson about your tolerance.
A good thing to do before you eat anything that could potentially be spicy hot (picante) which is nearly everything you could consume in Mexico with the possible exception of Churros is to ask if it is hot. Just say "picante" so that your inflection rises at the end - maybe tilt your head endearingly to one side so they think you are cute and don't decide to say no just for laughs (which may not seem friendly but one of the best ways to know if you are liked is whether or not people play jokes on you - if they are always respectful and serious they probably hate you.) Unfortunately, for most Americans the definition of Picante is significantly different from that operating in Mexico. In that case, the best thing for you to do is to develop a frame of reference. Figure out how you feel about Jalapenos, Habaneros, and Lettuce (Lechuga). Then you ask if the particular food/salsa in question is hotter than Jalapenos/Habaneros/Lechuga and guage whether or not that means that you should avoid it.
When in doubt ask if you can have a taste. Most places will be more than happy to watch you taste a small portion of something. In Guadalajara, because there are not large amounts of tourists, especially in the parts I frequent, people are very devoted to making sure that I am taken care of and have the opportunity to try anything I am interested in. So far that's the way I've gotten out of eating entire orders of things that I would most likely find disgusting. If you are offered a taste of something you should generally accept. If you absolutely cannot bring yourself to try something try to invent an excuse of sufficient seriousness that you don't insult your host's/friend's/random person who wants you to try something's feelings like "I'm allergic, if I eat that my tongue will turn purple, and I will swell up and die" (loosely translated: si como esta cosa me lengua va ponerse morado y yo inchare y morire - you won't learn those kinds of helpful phrases anywhere else.)
At this taco stand around the corner, we eat 8 tacos, a large chocomil, freshly squeezed orange juice, and a coca-cola (the national beverage of choice - well, other than tequila) for 58 pesos, about $5.50. Can't beat that with a stick.
When I come home - I'll do the cooking.