Preheat oven to 350 degrees F. Grease a 2-quart square baking dish; set aside.
In a large skillet crisp-cook bacon according to package directions. Transfer bacon to paper towels, reserving drippings in skillet. Drain bacon well. Crumble bacon into large pieces and set aside. Cook sweet peppers in the bacon drippings over medium heat about 5 minutes or until tender.
In a large bowl combine cooked peppers, oats, bacon, and 1/2 cup of the Parmesan cheese. In a medium bowl whisk together milk and egg. Transfer oat mixture to the prepared baking dish. Pour egg mixture over oat mixture. Sprinkle the remaining 1/2 cup Parmesan cheese on top.
Bake for 30 to 35 minutes or until top is golden brown and mixture in set in center. Remove from oven. Let stand for 5 minutes before serving.