Heat the pellet grill or smoker to 325℉ with your choice of wood or pellets.
Peel and slice the potatoes - Use a vegetable peeler to peel 3 strips of skin off each washed potato, spacing out the peels. Then position the potatoes on a cutting board where they are the most stable, and slice into rounds slightly less than ¼" thick. Add the potato slices to a large bowl of cold water.
Rinse and dry the potato slices - Rinse the potato slices under cold running water for about 1 minute to remove excess starch. Then spread the slices out on a clean tea towel in a single layer. Roll up the towel, and allow the potatoes to dry while you make the cream sauce.
Sauté the vegetables - In a skillet over medium heat, melt 2 tablespoons of butter. When melted, add the diced jalapeño and onion. Sauté about 3-4 minutes to soften and get a small bit of color on the vegetables. Season with salt and black pepper.
Make the roux - To the same skillet with the sautéed jalapeños and onions, add 2 tablespoons of flour and mix it in well. Cook this roux for about 60 to 90 seconds, stirring constantly.
Finish the cream sauce - Pour the chicken stock and heavy cream in the skillet. Whisk everything together, making sure to scrape the bottom of the pan to get all those flavorful bits from the jalapeños and onions. Let this come to a soft boil, stirring constantly. *The sauce won't come up to its full thickening power until it reaches a soft boil. Once it reaches a soft boil, reduce the heat to low, and add about 75% of the grated cheddar. Stir until the cheese melts completely, creating a smooth, creamy sauce. Turn off the heat while you arrange the potatoes.
Arrange the potato slices - Lightly grease your casserole dish with about 1 tablespoon butter. Then arrange the dried potato slices standing up and slightly diagonally in the bottom of the casserole dish. *Don’t worry about making it perfect – as you add more potato slices, you can stand them up at more of a 90 degree angle to make room for more potatoes, filling in any gaps as you go.
Pour on the cream sauce and smoke - Pour the jalapeño cream sauce right over the arranged potatoes. Use a spatula to gently work the sauce into all the nooks and crannies between the potato slices. Then place the casserole dish on the pellet grill or smoker, and smoke at 325℉ for about 1 hour 45 minutes - you want the potatoes to be almost done, but not quite.
Add more cheese and finish smoking - Sprinkle the remaining grated cheddar cheese in an even layer on top of the potatoes. Then add the cooked and crumbled bacon, and a few jalapeno slices if you want some extra heat. Return the dish to the smoker for another 15-30 minutes until the cheese is melted and bubbly, the bacon is crispy, and the potatoes are fork-tender. *See notes.
Rest and serve - Remove the potatoes from the smoker, and allow to cool about 20-25 minutes before serving. The garnish with sliced green onions. The cooling time is important, as your sauce will thicken as it cools.