Yes, they're like tom seedlings, they should be allowed to dry out between waterings. If they're healthy at this point, you can't be doing too much wrong. What are the seedlings in? Modules? Pots? If you can't poke a finger in and down to test the mix, work off the surface appearance. Unless the mix is unusually deep, a properly dry surface means dry. It's best always to err on the side of under-watering. A day or so of dry mix - unless it's scorching hot - won't hurt them. In fact, it will help. Chillies, like toms, prosper if treated mean.