I've eaten varieties of kugelis since a child. My family always grated the potatoes fine and never used bacon. Those were never my favorites. I think the coarsely grated style with bacon is surely better in both flavor and texture. It is important to prevent the potatoes from greying up. And I'd be careful about too much crisping on top. If you're bringing this dish to a potluck you want it to look as good as it tastes and feels in the mouth. Once it was served to me from a deeper baking dish (4 inches?) That batch turned out wonderfully well. Great winter dish for outdoorsmen!