Chäppeli is a very Swiss diminutive but an archaic one (at least to someone who didn‘t grow up in a deeply religious rural part of Switzerland). It refers not to Chappe (cap) as one would guess today, but to the Latin root capella (chapel) or German Kappel, a pretty common name for villages in German-speaking countries and even in the Netherlands. Some were founded as/around monasteries, e.g. Kappel am Albis. As for spelling: it depends. There is a written tradition in some dialects, particularly in Berne. Not the same thing as rules, and an obscure subject for most locals.