Preheat oven to 375 F.

Melt the butter in a Dutch oven over low heat. Add the shallot and cook until softened and butter starts to brown, about 2-3 minutes. Add the flour and whisk until well combined and smooth. Continue cooking over low heat, whisking constantly, until the flour smells nutty, about 2-3 minutes. Start adding the milk, a little at a time, whisking with each addition to create a smooth sauce. When all of the milk is incorporated, add the cream, cheddar, mozzarella and 1 cup of the Parmesan cheese and stir until cheese is melted and sauce is smooth. Season cheese sauce with nutmeg, salt and pepper to taste. Add the cooked pasta to the pot and gently stir until the pasta is completely coated with the cheese sauce.

Place the remaining 1/4 cup of Parmesan cheese, panko and parsley in a small bowl. Add the olive oil and stir to combine with a fork. Season with salt and pepper to taste. Sprinkle the panko mixture evenly over the top of the pasta. Place Dutch oven in preheated oven and bake until the topping is lightly browned and the sauce is bubbling, about 25-30 minutes.