Heat oven to 425 degrees. Line a large baking sheet with parchment. Fry bacon until crisp; drain on paper towels. Finely crumble slices, reserving one slice separately. Add minced bell pepper to the bacon drippings in pan and cook until softened; drain and set aside.

In a large mixing bowl, whisk together flour, baking powder, the 1/2 teaspoon salt and 1/4 teaspoon pepper. Add the lard pieces, and with a pastry blender or your fingers, combine until crumbly. Stir in the three slices of crumbled bacon, the bell pepper, and 2 Tablespoons of the chives until well blended. Add milk and stir just until a slightly sticky dough forms. Transfer dough to a lightly floured surface, knead gently about 10 times, then shape into a rectangle, 3/4-inch thick. Using a sharp knife, cut the rectangle in half lengthwise, then cut each lengthwise piece into 5 equal triangles. Arrange the triangles on parchment-lined baking pan. In a small bowl, beat together egg and water and brush lightly over tops of scones. Bake for 12-14 minutes or until golden.

While scones are baking, prepare butter. In a small bowl, combine the softened butter with the remaining slice of crumbled bacon, the remaining 3 Tablespoons of minced chives, and the coarse salt and freshly ground pepper, to taste. Serve bacon-chive butter with hot scones. Makes 10 scones and 1/2 cup bacon-chive butter.