1. Preheat oven to 325oF.
2. In a large skillet, sauté bell pepper and 2 tablespoons butter over medium-high heat for five minutes. Set aside.
3. Place cubed bread in a buttered 9x13-inch casserole dish or pan.
4. Toss together cooked peppers, cheese and diced ham in a large bowl, then spread evenly over bread cubes.
5. Beat eggs with milk.
6. Place salt, mustard, nutmeg and pepper in a small bowl and mix a few tablespoons of the egg mixture in with the spices and mix with a fork until dissolved and not lumpy then add back into egg mixture and whip to combine.
7. Pour the egg mixture over the bread mixture and press down slightly so bread absorbs liquid.
8. Bake uncovered for 1 hour at 325oF.
9. Increase heat to 350 degrees F and bake for another 15 minutes or until browned on top and a knife inserted into the center of the pan comes out clean.
10. Allow casserole to rest for ten minutes before serving. Cut into squares and serve with a spatula.