Preheat and prep. Heat the oven to 375°F (190°C). Grease a 9x13-inch baking dish.
Sauté the veggies. Warm oil in a skillet over medium heat.
Add onion and bell pepper with a pinch of salt. Cook 4–5 minutes until softened.
Stir in aromatics. Add chili powder, cumin, smoked paprika, and garlic powder. Cook 30 seconds until fragrant.
Remove from heat and stir in green chiles.
Mix the creamy base. In a bowl, whisk cream cheese, sour cream, and 1/2 cup enchilada sauce until smooth.
Combine the filling. In a large bowl, toss shredded chicken with the sautéed veggies and creamy sauce. Season with salt and pepper.
Layer the casserole. Spread 1/4 cup enchilada sauce on the bottom of the dish. If using zucchini, lay a thin, even layer to cover the bottom.
Add the chicken mixture. Spoon half the chicken mixture over the base.
Drizzle with 1/3 cup enchilada sauce. Sprinkle with half the cheddar and half the Monterey Jack.
Repeat. Add another light layer of zucchini (if using), the remaining chicken mixture, more sauce, and the rest of the cheese.
Bake. Cover loosely with foil and bake 15 minutes. Remove foil and bake another 10–15 minutes, until bubbly and lightly golden.
Rest and garnish. Let it sit 10 minutes to set.
Sprinkle with cilantro and add optional toppings as desired.