Cook sausage in a nonstick skillet over medium-high heat until browned, stirring to crumble. Drain and set aside.
Combine milk and water in a saucepan; bring to a boil over medium-high heat. Stir in grits; cover, reduce heat, and simmer 7 minutes or until thick, stirring frequently. Combine grits mixture, sausage, cheese, parsley, salt, garlic, and peppers in a large bowl; set aside.
Beat egg whites at high speed of a mixer until stiff peaks form. Gently stir one-fourth of egg whites into grits mixture; gently fold in remaining egg whites. Spoon mixture into a 1 1/2-quart casserole coated with cooking spray. Bake at 375° for 25 minutes or until set and lightly browned.
Place a medium nonstick skillet over medium-high heat until hot. Add bell pepper, and sauté 4 minutes or until tender; serve warm with grits.