Make the hash brown casserole layer. Combine the shredded potatoes, sour cream, cream of chicken soup, shredded cheddar, ¼ diced onion, jalapeños, and salt and pepper in a large bowl. Mix well. Spread hash brown mixture into the bottom of a 9x13 inch buttered casserole dish.
Heat a skillet over medium heat. Add the diced bell pepper and diced onion. Saute until tender, season with salt and pepper, and remove from the skillet. Set aside until it's time to assemble the casserole.
Cook bacon until done to your liking. Transfer to paper towels to drain, and then chop. Set aside. *You can also reserve some of the bacon grease to add to the sausage gravy.
Cook 1 pound of ground breakfast sausage in the skillet over medium heat, breaking the sausage into smaller crumbles as it cooks. When sausage is cooked through, remove about half of the crumbles from the skillet and set aside, keeping the grease in the skillet with the remaining sausage.
Make the sausage gravy. Add about ¼ cup of flour to the sausage and the sausage grease in the skillet. Stir to combine, and allow the flour to cook for about 1-2 minutes. Then, remove the pan from the heat and slowly whisk in 1 cup of milk and 1 cup of half & half. Return the pan to the heat and continue to cook until the gravy reaches your desired consistency. Then, remove the skillet from the heat. *Remember, the sausage gravy will thicken as it cools.
Preheat pellet grill or smoker to 325 degrees F.
Assemble the breakfast casserole. In the casserole dish, top the hash brown mixture with an even layer of sausage gravy. Sprinkle the sausage crumbles and chopped bacon on top of the gravy. Pour the scrambled eggs over top, making sure to pour them evenly over the casserole. Sprinkle the diced peppers and onions on top.
Place the casserole dish on the grill, and cook for about 75-90 minutes, or until the casserole is almost all the way set. Sprinkle shredded cheddar on top of the breakfast casserole, and continue to cook an additional 10-15 minutes, or until the eggs are cooked through and the cheese is melted.
Carefully remove the casserole dish from the grill. Allow the smoked breakfast casserole to cool for about 10 minutes before serving. Serve with hot sauce, salsa, or sliced green onions for garnish.