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Heat the oven to 350 F. Generously butter a 2-quart baking dish. In a deep skillet or saute pan, cook the bacon until just crisp. Remove it to paper towels and set aside to drain. Leave about 2 tablespoons of bacon drippings in the skillet and add 3 tablespoons of butter. Add the onion to the pan and saute until softened. Add the flour and continue cooking, stirring, for about 1 minute. Gradually stir in the milk. Cook, stirring constantly, until the sauce is thickened. Stir in the salt, pepper, and nutmeg, if using. Stir in the cooked bacon. Layer half of the potato slices in the prepared baking dish. Spoon half of the sauce mixture over the potatoes. Top with the remaining potatoes. Spoon the remaining sauce over all. Cover the casserole tightly with foil and bake for 1 hour. Remove the foil, return to the oven, and bake for about 20 to 30 minutes longer or until the potato slices are fork-tender.
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