Heat a small skillet over medium heat; add the bacon and cook, stirring, until lightly crisp, 7 to 8 minutes. Drain and set aside; reserve the bacon fat for another use.
Bring a 2-quart pot of water to a boil. Salt the water generously; it should taste like light seawater. Add the pasta and cook, stirring occasionally, until just tender to the bite, or al dente. Before draining, use a heavy liquid measuring cup to pull out 3/4 cup of the pasta water; set aside. Drain the pasta and return the pot to the heat.
Heat the butter in the pasta pot, then add the cooked pasta. Stir in 1/2 cup of the reserved pasta water. Add the American cheese and stir until smooth. Add the cheddar, milk, pepper and the cooked bacon and mix well. Dribble in extra pasta water as needed to make a soft, creamy sauce. Garnish with parsley if using. Serve immediately.