At least 1 hour before smoke cooking, soak wood chunks in enough water to cover. Drain before using.
Trim fat from ribs. For rub, in a small bowl combine salt and black pepper. Sprinkle rub evenly over ribs; rub in with your fingers.
For sauce, in a small saucepan combine onion, honey, ketchup, undrained chile peppers, chili powder, mustard, and garlic. Cook and stir over low heat for 10 to 15 minutes or until desired consistency.
In a smoker arrange preheated coals, drained wood chunks, and water pan according to manufacturers directions. Pour water into pan. Place ribs, bone sides down, on grill rack over water pan. (Or place ribs in a rib rack and place on grill rack.) Cover and smoke for 2-1/2 to 3 hours or until ribs are tender, brushing once with the sauce during the last 15 minutes of smoking. Add additional coals and water as needed to maintain temperature and moisture. Pass any remaining sauce with ribs. Makes 6 servings.