Hey dippy. They need to come out before serving, they are there to add flavour not to zap your guests taste buds to oblivion! Kasmiri chillies are usually used in this fashion and you would not want to chew one of these bad boys.
Gormless is right, just taste as you go along, if there is too much heat, just remove. Otherwise leave them in upto serving time. If your reheating the next day I'd leave the chilli in if you feel it needs a kick.
I make mine with the hottest chilli in the world, bhut jolokia, 5 mins in the sauce and ya zapping!
Dried red chillies, lost here, I know of those dried red chillies but they are in tiny bits. I always buy fresh. You can buy fresh and freeze them you know . Thats what I do! Then you can either score them down the middle to let out the flavour so your guests can pick them out or you can. Or you could mince them up fine and add them to the dish to stay. I usually put in the green chillies hotter so you need less.
You can also get those fatter green chillies which are milder in taste. I never heard of dried red chillies.
If you freeze put them in a secure flimsy bag and soak in water before cooking to defrost. It only takes five mins to defrost.