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Preheat oven to 350ºF. In a large bowl combine diced potatoes, 1 ⅓ cups of the cheese, sour cream, cream of chicken soup, ¼ cup of the melted butter, salt, and pepper.
Spread mixture evenly into a 13x9-inch baking dish.
In a medium bowl combine cereal, remaining ⅔ cup cheese, and remaining 2 tablespoons melted butter.
Sprinkle mixture over potatoes in dish.
Bake until potatoes tender and top is golden brown, 50 to 60 minutes.