1. In a large skillet, saute shallots in butter until tender. Add the spinach, 1/2 teaspoon salt, 1/4 teaspoon pepper and nutmeg.
2. In a greased 3-qt. baking dish, layer half of the potatoes, 1/3 cup cheese and half of spinach mixture. Repeat layers. Top with remaining cheese.
3. In a small bowl, combine the cornstarch, milk, cream and remaining salt and pepper until smooth. Pour milk mixture over cheese.
4. Cover and bake at 350° for 1 hour. Uncover; bake 15-20 minutes longer or until potatoes are tender. Yield: 12 servings (2/3 cup each).