Heat a large skillet over medium-high heat, add the bulk breakfast sausage, and cook for 7–9 minutes, breaking it into small crumbles, until fully browned with no pink remaining. Drain excess grease, transfer to a paper towel-lined plate, and set aside to cool.
Dice the red bell pepper into ¼-inch pieces and slice the green onions into thin rounds. Reserve half of the sliced green onions for topping the casserole before baking.
Use a serrated knife to cut the bread into 1-inch cubes — you should have about 6 cups. If using fresh bread, spread cubes on a baking sheet and dry in a 250°F (120°C) oven for 10 minutes.
Whisk together the 6 eggs, 2 cups whole milk, dry mustard, garlic powder, onion powder, salt, and black pepper in a large bowl for about 60 seconds until fully combined and uniform.
Generously spray a 9x13-inch baking dish with cooking spray, or rub the bottom and all sides with softened butter, making sure to coat the corners.
Spread the bread cubes in an even layer in the greased dish, then top evenly with the cooked sausage crumbles, diced red bell pepper, half the green onions, and 1½ cups of the shredded cheddar.
Pour the egg custard evenly over all layers, then press down gently on the bread with a fork so it begins absorbing the liquid. Cover tightly with plastic wrap and refrigerate for at least 8 hours or overnight.
Remove the casserole from the fridge 20–30 minutes before baking and preheat the oven to 350°F (175°C). Remove the plastic wrap, scatter the remaining ½ cup cheddar and reserved green onions over the top.
Bake uncovered on the center rack for 50–60 minutes until the top is golden brown and the center is fully set (no jiggle) or registers 160°F (71°C) on an instant-read thermometer. Tent with foil if the top browns too quickly.
Let the casserole rest for 10 minutes after removing from the oven, then cut into squares and serve immediately with an offset spatula.