Preheat oven to 350 degrees F. Cook bacon in large skillet until crisp. Reserve 2 tablespoons of the drippings. Drain bacon on paper towels; crumble and set aside. Add onion to drippings in skillet; cook and stir 3 minutes or until softened.
Spread 1/2 of the bread cubes in 13x9-inch baking dish. Layer with 1/2 each of the onion, bacon, Cheddar cheese and mozzarella cheese. Spread evenly with cottage cheese. Top with remaining bread cubes, onion, bacon, Cheddar cheese and mozzarella cheese.
Beat eggs in medium bowl until foamy. Add milk, mustard, nutmeg and pepper; beat until well blended. Pour evenly over top. Press bread cubes lightly into egg mixture until completely covered. Let stand 10 minutes.
Bake 40 to 50 minutes or until center is set and top is golden brown.