Recipe: Bread Pudding with Bacon & Herbs

Today we bring to you a dish that's great for either breakfast or dinner, as it's hearty and savory: bread pudding with bacon. The recipe comes from The Auntie Em's Cookbook, a collection of recipes from Auntie Em's in Eagle Rock. We're coming up on the perfect time of year for this.
Bread Pudding with Bacon & Herbs
Serves 6 to 8
10 slices applewood-smoked bacon
3 tablespoons unsalted butter, softened
4 tablespoons finely chopped chives
4 tablespoons finely chopped basil
3 tablespoons finely chopped parsley
3 tablespoons finely chopped oregano
1 cup grated good cheddar (such as Hook's or Cabot Clothbound)
1 cup grated Gruyère cheese, plus 3 tablespoons for garnish
9 to 10 slices good quality stale white bread, or any other bread, crusts trimmed and reserved for another use
2 teaspoons sea salt, divided
2 teaspoons freshly ground pepper, divided
10 large eggs
3 cups heavy cream
2 cups milk
½ teaspoon ground nutmeg
½ teaspoon cayenne pepper
Fry bacon in a large skillet over medium heat until crisp, about 4 to 5 minutes. Cut into 2-inch pieces and set aside on a paper towel to drain fat.
Rub a medium baking dish (about 10 ½" x 7" or 1-quart gratin dish) with softened butter. In a medium bowl, mix together chives, basil, parsley, oregano, bacon, cheddar and Gruyère. Line baking dish with a layer of bread (about 3 slices), trimming to fit if needed. Season bread with 1 teaspoon each salt and pepper. Scatter half of the bacon-cheese mixture over the bread. Repeat with a layer of bread and the remaining half of the bacon-cheese mixture. Finish with a layer of bread.
In a medium bowl, beat eggs with cream and milk. Season with 1 teaspoon each salt and pepper, nutmeg, and cayenne, and mix well. Pour egg mixture over bread. Sprinkle remaining 3 tablespoons Gruyère on top and cover with plastic wrap. Let sit in refrigerator for 24 hours.
Preheat oven to 325 degrees. Remove plastic wrap and bake for 45 minutes. Check doneness by inserting the tip of the knife into the center of the pudding. The knife should come out clean. If it doesn't, cook for 5 minutes more and test again.