Add the cubed red potatoes to a large saucepan and cover with cold water by about 1 inch.
Add 2 teaspoons of kosher salt, then bring the water to a boil over high heat.
Once boiling, reduce to a simmer and cook for 12 to 14 minutes, until the potatoes are fork-tender but not falling apart.
Drain the potatoes and set them aside.
Place the eggs in a small saucepan, cover with cold water by 1 inch, and bring to a boil.
Once boiling, cover the pan, turn off the heat, and let the eggs sit for exactly 10 minutes.
Transfer the eggs to an ice bath immediately to stop the cooking and make peeling easier.
Once cool, peel the eggs gently. Chop one egg and slice the other into thin rounds for garnish.
Lay the bacon slices in a large skillet over medium heat.
Cook the bacon, flipping occasionally, until crispy.
Transfer the bacon to a paper-towel-lined plate, but do not drain the bacon grease from the skillet.
Add the diced onion and celery to the bacon drippings.
Cook over medium heat for 4 to 5 minutes, until soft and slightly golden.
Sprinkle in the all-purpose flour and stir for about 1 minute to cook it out.
Pour in the white wine vinegar, water, granulated sugar, dry mustard, and the remaining 1 1/2 teaspoons kosher salt.
Cook for 2 to 3 minutes, stirring occasionally, until the dressing thickens slightly, looks glossy, and smells savory and tangy.
Turn off the heat.
Add the drained warm potatoes directly into the skillet with the dressing.
Stir gently to coat every potato cube in the warm bacon-vinegar dressing.
Crumble the crispy bacon and fold half of it into the potato mixture.
Transfer the German potato salad to a serving dish.
Arrange the sliced hard-boiled egg over the top.
Scatter the remaining bacon crumbles over the salad.
Finish with a generous handful of chopped fresh chives.
Serve hot, at room temperature, or cold.