You've clearly never had a bowl of truly hot chili.
As for catching fire, I just rule that a merciful flaming weapon simply can't catch something on fire (rationalized as being more akin to heatstroke, sunburn or the like).
Alternatively, if one allows the target to catch fire, then rule that fire damage on subsequent rounds is lethal, because at that point it's no longer directly associated with the weapon.
In any case, the target retains all resistances and immunities as normal; non-lethal fire damage is still fire damage, so fire elementals are still immune to it.