In a skillet over medium heat, cook bacon until crisp. Remove bacon and drain, reserving drippings in skillet. In a small bowl, mix sugar, flour, egg and vinegar until smooth. Stir in water and milk and add to drippings. Crumble bacon and return to skillet. Cook over medium-low heat until thickened. More water or milk may be added until dressing reaches desired consistency. Serve warm.
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