Preheat the oven to 350 degrees F. Spray a broiler pan with nonstick spray.
Mix together the bread and milk in a bowl and set aside.
Add the ground beef, bacon, eggs, chopped red onion, 2 tablespoons ketchup, 1 tablespoon mustard, 1/2 teaspoon salt and 1/2 teaspoon pepper to a large bowl. Add the soaked bread and mix with your hands, trying to keep the mixture light. Gently mix in the cubed Cheddar, making sure to distribute it evenly throughout the meat.
Form the meat mixture into a loaf approximately 6 to 8 inches wide and 1 1/2 inches thick on the prepared pan. Mix the grated yellow onion with the remaining 1 cup ketchup, 1/4 cup mustard, 1/2 teaspoon salt and 1/2 teaspoon pepper in another bowl. Spread half of the sauce on top of the meatloaf. Tent the pan with foil and bake for 1 hour.
Remove the foil, add the rest of the sauce and continue baking until the internal temperature reaches 160 degrees F and the meatloaf is no longer pink in the middle, another 35 to 40 minutes. Sprinkle on the grated Cheddar and return to the oven for 5 minutes to melt. Let the meatloaf rest for 10 minutes before removing to a platter.
Slice and serve with the sliced red onions and dill pickle chips.