If using bacon, cook until crisp, remove from pan and crumble, then set aside.
Sauté onions in vegetable spray until soft.
Spread half of the quartered bread slices on the bottom of a greased 9x13 pan. Sprinkle with 1/2 the cheese, onions and bacon, if using; repeat layers.
Combine eggs, milk, salt, pepper and nutmeg. Pour over top layer in pan. Press on casserole with your hands to make certain that the milk goes all the way through the bread.
The casserole can be prepared at this stage and refrigerated until 1 hour before serving time.
Bake in moderate oven, 350°F, 45-50 minutes until puffed.