Saute bacon and onion in saucepan until onion is softened, lightly browned. Stir in sweet pepper; saute 1 minute.
Add potatoes and chilies; cook, stirring, 5 minutes. Add broth, corn, salt and cayenne pepper. Cover; simmer 15 minutes, until potatoes are fork-tender. Remove half of soup to food processor. Whirl to puree, return to saucepan. Stir in half-and-half. Remove from heat. Add cilantro, if desired. Makes 8 servings.