In a large skillet, heat butter over medium heat. Add onion, red pepper, and garlic. Cook and stir 6 to 8 minutes or until just browned. In a very large bowl combine onion mixture, bread cubes, sausage, 2 1/2 cups cheese, and parsley. Transfer mixture to a greased 3-quart rectangular baking dish.
In a medium bowl, whisk together the eggs, half-and-half, salt, and black pepper. Pour evenly over the bread mixture. Press lightly with the back of a large spoon to moisten all of the ingredients. Cover with foil. Chill 4 to 24 hours.
Preheat oven to 350°F. Bake, covered, for 30 minutes. Uncover and bake 30 to 35 minutes more.
Remove from oven. Sprinkle with remaining 1/2 cup cheese. Let stand 15 minutes; serve warm. Garnish with chives, if desired.