Saute the onions over low heat in 1 tablespoon of olive oil until soft. Place the vinegar, 1/4 cup of olive oil, sugar, peppercorns and thyme in a large noncorrosive saucepan and bring to a boil. Add the onions to the hot liquid and simmer for 5 minutes. Remove the pot from the heat and allow the onions to steep for at least 2 hours or overnight. (if storing overnight, place in a bowl and cover.) When ready to serve, drain the liquid and top with thyme.
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