1. In 8- or 9-inch skillet (preferably with a non stick finish) over medium-low heat, cook bacon until browned. Remove bacon to paper towels to drain. Discard bacon fat in skillet; wipe skillet clean with paper towels.
2. Peel potatoes. Coarsely shred potatoes and onion. In bowl, mix potatoes, onion, bacon, salt, and cracked pepper. In same skillet over medium-high heat, heat 2 tablespoons butter or margarine (1/4 stick) until hot. Add potato mixture and, with metal spatula, spread to cover bottom of skillet evenly. Reduce heat to medium-low; cook about 5 minutes or until underside is browned and crisp, shaking skillet frequently to keep pancake moving freely
3. Invert potato pancake onto large plate. Place skillet over medium-high heat; add 1 tablespoon butter or margarine. Slide pancake back into skillet; reduce heat to medium-low. Cook pancake about 5 minutes longer or until underside is browned and crisp.