Prepare two 9" round cake tins and preheat oven to 325ºF/165ºC. Cream butter and sugar together until fluffy. Mix in eggs, mashed bananas, nutmeg and vanilla. In a separate bowl, mix all the dry ingredients. Add the dry ingredients to the butter mixture and combine until just mixed (don't over-mix). Split between two two cake tins. Bake for 25-30 minutes, or until cake is set. Let cool and remove from tins.
Frosting
Whip butter and peanut butter together until fluffy. Add vanilla. Mix in icing sugar 1 cup at a time. Add milk and whip until fluffy and smooth.
Candied Bacon
Preheat oven to 375ºF/190ºC. Place a wire rack on top of a cookie sheet. Lay bacon out onto wire rack. Sprinkle bacon generously with half the sugar. Bake for 10 minutes. Take out, flip the bacon slices, sprinkle with the remaining sugar, bake for 10-15 minutes or until bacon starts to brown and the sugar has melted and caramelized. Remove from oven and allow to cool.
Assembly
Chop candied bacon into small pieces. Assemble cake layers with frosting, adding a third of the candied bacon between the layers. Finish frosting the cake, and sprinkle remaining bacon pieces on top. Serve.