Line up the tater tots in a buttered 9-by-13-inch baking dish.
Add the olive oil to a large skillet over medium heat. Add the sausage and onion and cook, breaking the sausage up with a wooden spoon, until browned and cooked through, 8 to 10 minutes. Set aside to cool slightly, then sprinkle it over the tater tots.
In a large bowl, mix the milk, half-and-half, seasoned salt, cayenne, eggs, bell peppers, half of both cheeses and some salt and pepper. Pour over the tots and sausage mixture, then top with the rest of the cheese. Cover with foil and refrigerate overnight.
Preheat the oven to 350 degrees F.
Bake, covered, for about 25 minutes. Remove the foil and continue to bake until the cheese is brown and bubbly and the casserole is cooked through, another 20 to 35 minutes. Cut into squares and serve.