Preheat oven to 375 degrees. Peel potatoes, and place in a bowl of water to prevent discoloring. Rub inside of a 9-by-12-inch oval baking dish with cut sides of garlic. Heat cream, milk, nutmeg, and 1 1/2 teaspoons salt in a medium saucepan over medium heat until bubbles form around edge. Season with pepper. Remove from heat.
Meanwhile, slice potatoes 1/8 inch thick; transfer to a bowl. Pour warm cream mixture over top. Mix well, using your hands to separate and coat potatoes, and transfer to prepared dish. Gently push potatoes down, and pour cream mixture from bowl over top. Sprinkle with Gruyere. Bake (with a baking sheet placed on the rack below to catch drips) until potatoes are fork tender and top is bubbling and brown, about 1 hour and 15 minutes.