Preheat the pellet grill to 275 degrees F.
Saute onion and diced jalapeno in a medium skillet over medium heat with a little oil. Cook for 2-3 minutes until softened.
Add garlic and cook for an additional 30 seconds, stirring often.
Remove from heat and set aside to cool for 5 minutes.
Combine the ground beef, pork, bread crumbs, egg, onion, bacon, garlic, cheese, and jalapeno in a large bowl.
Place the meatloaf mixture into a 9 x 9 aluminum tray and form into an evenly shaped loaf.
Combine ketchup, brown sugar, mustard powder and ground nutmeg in a bowl.
Apply the mixture on the top of the meatloaf.
Place the pan on the grill or smoker, close the lid and cook for 1 1/2 hours or until the meatloaf reaches an internal temperature between 160-165 degrees F.
Remove the smoked meatloaf from the grill, and let it rest for 10 minutes before slicing and serving.
Store leftovers in an airtight container in the refrigerator for up to 4 days.