Thre are a number of reasons why any plant would be growth stunted, starting with the soil they are growing in.
What kind of soil do you have?
How much organic matter is in that soil?
How well does that soil drain?
How well does that soil retain moisture?
What does the soil smell like?
What kind of life is in that soil?

Perhaps, water stressed plants set fruit. Is it continuing to set fruit & not grow? Very surprising.

Many of us with cool summer climates would be interested in your method because sometimes we can't get our peppers to fruit at all.

In my experience that is actually fairly normal for bell pepper plants. Once they have fruits they will focus a lot of energy on growing those fruits and ripening them. As a result, new growth, in height or in new leaves and buds, will slow for a while. Once the existing fruits are picked the plant will put on new growth quickly. You can try apply a diluted balanced fertilizer at this point but don't go overboard with too much nitrogen.

I have the same problem, but I believe that the plants aren't just sitting there, they're using their energy to build up a substantial root system. But I do find that if I snip off those first few peppers when they're tiny, in the long run I end up with a whole lot more peppers per plant.