Mother-in-law gave me a whole grocery bag of banana peppers. I'm excited, but have no clue how to use them. Ideas?

Coat in cornmeal and fry - delicious.

If I may be permitted to toot my own horn, you can use some of them in either of these recipes:
http://food52.com/recipes/823-hungarian-meatballs
http://food52.com/recipes/2174-hungarian-chicken-stew-over-puree-of-parsley-root

Also make some lecso:
http://homepage.interaccess.com/~june4/lesco.html
http://zsuzsaisinthekitchen.blogspot.com/2010/10/hungarian-ratatouille-lecso.html
http://www.thehungarydish.com/lecso-recipe-guest-post-by-peter-pawinski/

What you can't cook or dry can be frozen. Cut in half lengthwise, take out stem, seeds and other innards. Slice in strips, then put in heavy plastic bags or other vapor-proof containers and freeze. Then you can take them out as you like, in the quantity you need.

I've made a Bolognese sauce and studded the peppers , serve them as an appetizer

Dry a few of them. Take some strong thread and a needle and sew through the top of the pepper and then put in a simple knot, give it some space and repeat with the next pepper. Hang them up from the ceiling like garlands, or hang them from a ceiling pan rack until dry. In the winter you can cut one or two off and use them for Chili or stews.
They're normally rather mild but each bunch is different; the red ones dried are used in Christmas Decorations and wreaths sometimes. (and still eaten after words if you make them yourself and don't shellac them).

Also pepper jelly is a good use for an abundance of peppers; and makes a very nice gift for Christmas.

And speaking of Christmas Tamales are traditional for Christmas in Mexican homes; The dried red peppers are used to make a tamale sauce.

Banana peppers are the best! So take one wash it cut It down the middle remove the seeds add (in a bowl) cream cheese and your favorite spicy seasoning I use tony chacheres works well!! Then spoon the filling onto the pepper add bacon bits then pop in an oven or toaster oven for 15 mins keep an eye in them tho!!!

I know a Hungarian lady who made large use of these peppers:
1) look up a recipe called 'Toltott Paprika': it's peppers stuffed with minced pork, rice and seasoning, and cooked in a tomato sauce.
2) another stuffing she made was a simple mix of ricotta, finely minced hard boiled eggs and a bit of butter. We had them with toasted crusty bread.
3) My favorite: cut in rings and remove the seeds, add thinly sliced cucumber and celery, and toss with extra virgin olive oil, white wine vinegar, and salt for a simple salad. This I'd definitely eat everyday! :)