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German Potato Salad with Bacon-Vinegar Dressing & Dill

2 1/4 lbs. medium-sized red-skinned potatoes, unpeeled and cut into 1/4-inch slices
6 bacon slices, chopped
1/2 c. finely chopped red onion
1/2 c. EACH white vinegar & water
2 tsp. EACH coarse-grained mustard, sugar & salt
1/2 tsp. ground black pepper
1/4 c. chopped fresh dill

Steam potatoes until tip of a knife easily pierces the center of the slices, about 10 minutes. Transfer to a large bowl. Cover with foil.

Sauté the bacon in a large skillet over medium heat until brown, about 3 minutes. Using a slotted spoon, transfer the bacon to paper towels. Discard all but 2-1/2 T. drippings. Heat the drippings in a skillet over medium. Add onion; sauté 2 minutes.

Whisk in the next 6 ingredients. Simmer until the mixture is reduced to 2/3 c., about 4 minutes. Remove from heat. Add the potatoes to the skillet and toss to coat with dressing. Let stand 3 minutes.

Sprinkle with chopped bacon and fresh dill; toss. Season to taste with salt and pepper. Transfer the potato salad to a serving platter. Serve warm.