1Heat oven to 350°F. Grease 1 1/2-quart casserole. Heat milk, water, salt and pepper to boiling in 2-quart saucepan. Gradually add grits, stirring constantly; reduce heat. Simmer uncovered about 5 minutes, stirring frequently, until thick.
2Stir in cheese and onions. Stir 1 cup of the hot mixture into eggs; stir back into remaining hot mixture in saucepan. Pour hot mixture into casserole. Dot with butter; sprinkle with paprika.
3Bake uncovered 35 to 40 minutes or until set. Let stand 10 minutes.