Cook bacon in a large skillet until crisp; remove, crumble, and set aside.
Drain off excess bacon drippings, leaving 1 to 2 tablespoons in the skillet. Sauté onions in bacon drippings until tender; drain. Combine onion, beans, and mushroom soup; blend well. Add salt and pepper to taste.
Spoon half of the green bean mixture into a greased 12x8x2-inch baking dish. Arrange water chestnuts over the layer; sprinkle half of crumbled bacon over the water chestnuts. Top with remaining bean mixture. Cover and bake at 350° for 30 minutes. Uncover.
Combine onion rings with remaining bacon and water chestnuts. Arrange over the top of the casserole.
Return green bean casserole to oven and bake for 8 minutes longer.
Calories per serving: 375