My family origin is Pahari farmers. In winters, my ancestral town's temperatures fall below freezing, yet Chili Powder from our region is a staple in most North Indian cooking (Kashmiri Mirch grown in JK and Himachal).
That Punjab and Mughlai trendline can be attributed to that reason - Kashmiri Mirch is a staple in both styles of cooking now, but if you look at "pind style" cooking, it's way less spicy. A traditional Kadhi, Saag, or Choley isn't going to be spicy but might have 1 Kashmiri Mirch added as a garnish.
Peppers only came to our portion of the Himalayas in the 18th and 19th century (hence why Bell Peppers are called "Shimla Mirch" - it was brought by the Brits), but became a popular commodity to sell due to high margins and easy to grow in small plots, which is important in JK and Himachal as land reform laws capped agricultural plots to 3 acres at most.
Also treating "South Indian" as a single cuisine group is a travesty.