For at least 1 hour before smoke-cooking, soak wood chunks in enough water to cover. Drain before using.
Meanwhile, for topping, in a small bowl combine ketchup, vinegar, and dry mustard; set aside.
In a medium bowl combine eggs and milk. Stir in bread crumbs, onion, sweet pepper, Italian seasoning, garlic, salt, and black pepper. Add ground beef and sausage; mix well. Shape mixture into an 8-1/2x5-inch loaf. Place in an 11-3/4x9-1/4x2-1/2-inch disposable foil pan. Top with bacon.
Prepare smoker. Add drained wood chunks to smoker. Place meat loaf in pan on top rack of smoker. Cover and smoke at 225 degrees F to 250 degrees F for 2-1/2 to 3-1/2 hours or until done (160 degrees F), brushing with topping after 2 hours.
Spoon off and discard fat. Let meat loaf stand for 10 minutes before slicing.