Preheat oven to 325 degrees F. Grease an 11 by 7-inch baking dish.
Put the cubed bread on a large cookie sheet and bake it until lightly toasted, about 10 to 12 minutes. Remove the bread from the oven and set aside.
In a large bowl, whisk together 3 cups of the milk and the 4 eggs until well incorporated. Add the toasted bread.
In a medium-sized saucepan, over medium heat, heat the remaining 1 cup of milk, sugar, vanilla and peanut butter until the peanut butter melts and the mixture is smooth. Combine the peanut butter mixture with the bread mixture and stir well until evenly distributed. Put the bread pudding into the baking dish and sprinkle with 3/4 cup of the crushed peanuts. Let sit for 1 hour.
Put in the oven and bake until dry and toasty, about 20 minutes. Remove the pudding from the oven and let cool. Brush with the grape jelly and garnish with a sprinkle of the remaining peanuts. Cut into squares and arrange on small dessert plates.
Recipe courtesy of Aaron McCargo Jr.