Preheat the oven to 325 degrees. Lightly butter a 1 ½ quart casserole dish. Place potatoes into a 3-quart saucepan and add enough cold water to cover the potatoes. Bring to a boil. Cover, reduce heat and cook for 20 minutes or until fork-tender. Drain the potatoes.
Mash the potatoes with a potato masher or mixer. Add the butter, sour cream, 1/2 cup of cheddar cheese, and chives. Mash or stir until mixed well.
Spoon the mashed potato mixture into the prepared casserole dish. Place into the oven and bake at 325 degrees for 20-25 minutes or until hot. During the last few minutes of cooking top with 1 cup of cheddar cheese, bacon pieces, and French fried onions. Return to the oven and bake until the cheese has melted.