Preheat oven to 350°. Sprinkle 1 cup mozzarella and cheddar cheese in a greased 13×9-in. baking dish. In a small bowl, beat eggs, cream cheese, milk, Parmesan, garlic powder and Italian seasoning; pour into dish. Bake 30 minutes.
Meanwhile, in a small skillet, cook sausage over medium heat until no longer pink, 5-6 minutes, breaking into crumbles; drain. Spread pizza sauce over egg mixture; top with sausage, pepperoni and remaining 1 cup mozzarella cheese. Bake until golden brown and bubbly, 10-15 minutes longer. Let stand 5 minutes before serving. Top with fresh basil, if desired.