1. Toss together bread cubes and butter; set aside. In a large bowl, mix peaches, sugar, lemon juice, lemon peel, cinnamon, vanilla, nutmeg, and raisins.
2. Spread 1/3 of the buttered bread cubes in a buttered 2-quart casserole with a lid; top with half the peach mixture, then half the remaining bread cubes. Evenly layer on remaining peach mixture and remaining bread cubes. Pour hot water over all.
3. Cover and bake in a 350 degree oven for 45 minutes. Uncover, sprinkle with nuts, and continue to bake until top is well browned (about 10 more minutes). Serve warm.
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