Refrigerate and save for another use. Using a vegetable peeler, remove the green peel from rind. Dice the rind.
Cover bowl refrigerate overnight.
Bring corners together and tie with a clean string. In a 4-quart Dutch oven kettle combine pickling spice bag, vinegar, sugar, and crushed red pepper. Bring to boiling, stirring to dissolve sugar. Stir in diced water melon rind, sweet peppers, onion and jalapeno. Return mixture to boiling.