Chemical engineer type here. Forgive the geek talk.
Any of the forms of capsaicin (monohydro, dihydro, homohydro, etc) are completely fat soluable - it dissolves into fats completely. It is partially alcohol soluable, only a fraction of the soluability of fats. Whole milk is better than 2% for 'killing the fire'. Swishing with olive oil would kill it even quicker, but where's the fun in that (not to mention the aftertaste)? Capsaicin is non-soluable in water - kind of like trying to throw water on a grease fire.
When I make my chili, I sautee the hottest peppers with the oil and meat - the capsaicin gets a nice transport in with the oil. Then, I always use a beer for a liquid 'filler' - for the added alcohol transport throughout the chili.