In a large skillet, cook and crumble the sausage until brown. Remove from skillet and drain on a paper towel. Pour off any excess fat. Add onions, garlic and peppers to the skillet and cook over medium-high heat until the veggies are soft and golden brown, about seven to eight minutes. Remove from heat and set aside.
To build the skillet, place a third of the cheese in a medium-sized ovenproof skillet. Add half the sausage. Add another third of the cheese, then the veggie mixture, the remaining cheese, the rest of the sausage. Sprinkle the top very lightly with chili powder.
Place into the oven and start watching it about five to seven minutes in. You want to bake it until the cheese is totally melted, hot, and slightly bubbling. Remove from the oven, top with the diced tomatoes and serve immediately with tortilla chips!