Cook bacon, then drain on a paper towels and set aside. Reserve 2 tablespoons to sprinkle on top of soup. Combine milk and water in a large saucepan, then bring to a boil. Remove from heat, add potatoes, and stir with a wire whisk until well blended. Add 3/4 cup cheese, stirring until cheese melts. Add all but 2 tablespoons of the bacon. Spoon into serving bowls and sprinkle evenly with remaining cheese, remaining bacon and freshly ground black pepper. Top with chopped chives and a dollop of sour cream, if desired.