For the aioli: Preheat a pizza oven or regular oven to 450 degrees F.
Coat the peppers with 2 tablespoons olive oil in a bowl, then place on a sheet tray. Roast until the pepper skin burns and blisters on all sides, 10 to 15 minutes.
Place the peppers in a glass bowl and cover with plastic wrap to let steam for 10 minutes. Remove the peppers from the bowl and carefully remove the charred skins, seeds and stems. Finely chop and set aside.
Add the egg yolk, lemon juice, garlic, mayonnaise and mustard to a medium bowl. Slowly drizzle in the remaining 2 tablespoons olive oil and whisk until emulsified. Add the basil and peppers and fold together until combined. Season with salt and set aside.
For the onions and tilapia: Very carefully slice the onions into paper-thin rings on a mandoline and place in a large bowl. Cover the onions with the milk and let sit for 15 minutes.
Preheat a fryer or fill a large Dutch oven with 3 inches canola oil and preheat to 350 degrees F. Line a tray with a wire rack.
Slice each piece of fish down the middle, then slice on the bias into 2/3-inch pieces. Place the fish in a shallow dish and sprinkle with the salt and pepper. Add the flour to another shallow dish.
Dredge the fish in the flour, then shake off the excess and carefully place in the oil. Cook until golden brown on all sides, 3 to 4 minutes. Remove to the wire rack.
Fully drain the onions, then carefully place them in the oil. Cook, moving the onions around, until golden brown, 3 to 4 minutes (be sure to watch, as they cook fast). Remove and season with salt.
Slice the baguette pieces through the middle horizontally without cutting through. Add the aioli to both cut sides of the bread. Lay 3 to 4 pieces of fish in each, then top with the crispy onions and the arugula and serve.