Preheat oven to 400 degrees.

Cook the macaroni until al dente. Drain and rinse in cold water. Drain again very thoroughly. Pour pasta in shallow baking dish.

Stir in yellow squash, red bell peppers, and 1 cup of cheese.

To make sauce, melt butter over medium heat. Whisk in flour and let bubble, whisking constantly, until it's beige. Immediately whisk in milk, and bring to a boil, whisking constantly. Remove from heat and whisk in remaining cheese, nutmeg, dill, salt and pepper to taste.

Pour the sauce over the pasta mixture and toss lightly. Bake 30 minutes or until bubbly and brown on top.