Bring first 3 ingredients to a boil in a large saucepan; gradually whisk in grits. Return to a boil; reduce heat, and simmer, stirring occasionally, 15 minutes or until thickened.
Add cheese and next 4 ingredients, stirring until cheese melts. Remove from heat; let stand 10 minutes.
Whisk in eggs, and pour into a lightly greased 11- x 7-inch baking dish. Sprinkle with paprika.
Bake at 350º for 1 hour or until set.
Note: Casserole may be prepared and chilled up to 24 hours before baking. Let stand at room temperature 30 minutes; bake as directed.