Use the tines of a fork to pierce several holes in each bratwurst. Place bratwurst in a resealable plastic bag set in a shallow dish. For marinade, in a medium bowl combine beer, brown sugar, mustard, 1 teaspoon chili powder, and the hot pepper sauce. Pour over bratwurst; seal bag. Refrigerate for 6 to 24 hours, turning bag occasionally.
At least 1 hour before smoke cooking, soak wood chips in enough water to cover. Drain before using.
Fold a 36x18-inch piece of heavy foil in half to make an 18-inch square. Place onions in center of foil. Dot with butter and sprinkle with 1 teaspoon chili powder. Bring up 2 opposite edges of foil; seal with a double fold. Fold remaining ends to completely enclose onions, leaving space for steam to build. Refrigerate the packet until ready to grill. Drain bratwurst, reserving marinade.
Arrange medium-hot coals around a drip pan. Test for medium heat above the pan. Sprinkle the drained wood chips over the coals. Place bratwurst on the grill rack over drip pan. Place onion packet next to bratwurst on grill rack directly over coals. Cover and grill for 20 to 25 minutes or until an instant-read thermometer registers 160 degree F when inserted near the center of a bratwurst, brushing once with marinade halfway through cooking. (For a gas grill, preheat grill. Reduce heat to medium. Adjust for indirect grilling. Grill as above, except add drained wood chips according to the manufacturers directions.)
Remove bratwurst and onion packet from grill. Serve bratwurst on toasted rolls and top with onions and sweet pepper relish. Makes 8 servings.