Rinse any dirt from dried chiles, and pat dry with a paper towel. Toast peppers on a very hot griddle, or in a skillet, 8 to 10 seconds on each side or just until beginning to puff and blister. (Do not allow peppers to burn or they will become bitter.) When cool enough to handle, remove and discard stems and seeds from chiles; tear into large pieces and place in a medium bowl. Cover with boiling water. Let stand 20 minutes or until softened. Drain, reserving 1 cup soaking liquid.
Sauté garlic in hot oil in a 6-qt. stainless steel or enameled Dutch oven over medium-high heat 30 seconds. Stir in onion. Cover and cook, stirring often, 10 minutes or until onion is tender. Uncover and cook, stirring often, 5 to 10 minutes or until onions are caramel colored. Stir in tomatoes, next 5 ingredients, softened chiles, and reserved soaking liquid. Remove from heat.
Process tomato mixture, in batches, in a blender until smooth. Return pureed mixture to Dutch oven. Bring to a boil; reduce heat, and simmer, uncovered, stirring often, 25 minutes or until sauce is thick and darkens in color. (As sauce thickens, partially cover Dutch oven to avoid splatters.)