In a 13x9x2 inch glass baking dish, alternate potato and apple slices in rows, packing tightly.
Combine remaining ingredients in heavy medium saucepan and bring to a boil over high heat. Pour hot syrup over potatoes and apples. Cover dish tightly with foil and bake 1 hour. Uncover casserole. (Can be prepared 3 hours ahead to this point. Let stand at room temperature, basting occasionally with pan juices.) Reduce oven temperature to 350°F Bake until potatoes and apples are very tender and syrup is reduced to a thick glaze, basting occasionally, about 45 minutes. Let stand 10 minutes before serving.