The title of the film is based on the character of the protagonist Jai (Prabhas). The protagonist is cool and calls everyone dude, but he is a hot head, spicy when it comes to fight, reacting to his enemies etc., This character is formed after a major incident in his life. Even he is cool and chilled, he is dangerous, spicy. Hence the title of the movie is kept as Mirchi
In his introduction scene where Manasa (Richa Gangopadhyaya) is threatened by other goons. He avoids fight with them but does warns them if they mess with him, they will face consequences.
It is to be noted that the character of Jai is totally changed after a flashback which is shown in the second half of the incident. In the flashback, he is very much aggressive, always ready to fight with his enemies. But the change in character has happened when he lost his dear mother during those fights. This resulted him to love people and thought of changing the villages and bringing them out of the disputes. He says a dialogue
Let's love dude, what do we lose by it? they will love back.
Moreover, there is a title song of the movie in which the character of the protagonist is explained clearly. Here's the English translation of the song lyrics and the very first says:
This guy is hot as mirchi
His vigorous physique resembles fire.
So, the name is based on the the character of the protagonist when whole movie is considered and not just one scene.