When I transplant from the starter peat pods to 3" paper cups, I get the plants as deep as I can (usually to the point of the first not-true leaves.)
Later when I transplant outside to the ground I try to get the cups an inch or three below the soil line. (Depends on how strong the stem is, some I go deeper than others).
Last year I had good results with this.
I actually had my irish wolfhound SNAP a stem last year. Broke the plant right the heck in half. A little more than 1/2 the stem was broke; the other 1/2 bent 90 degrees.
I wetted it down, splinted the stalk with a stick, ran a loom of wire tie around the stalk & stick, made some mud, and built up a mound of mud to about 6" high.
Plant survived and produced fine - late in the fall I tore down the mound of packed mud I'd made around it and discovered it'd re-rooted itself above and below the splint I made.
The offending creature... (the bottom most pepper is the one he later broke)
And the Reaper plant he broke, 3 months later. It was still alive and very healthy, produced fairly good, given the near-death setback it had.
Moral of the story, they'll grow roots up the stalk, if they have the right conditions for it!