Preheat oven to 350°. Cook onions in a large saucepan in boiling water to cover 5 to 7 minutes. Drain, cool slightly, and peel. Place in a lightly greased 8-inch square baking dish.
Melt 2 Tbsp. butter in a heavy saucepan over medium heat; whisk in flour until smooth, and cook, whisking constantly, 1 minute. Gradually whisk in milk, and cook, whisking constantly, 1 minute or until thickened and bubbly. Add cheese, hot sauce, salt, and ground white pepper, and whisk 2 minutes or until cheese is melted. Pour mixture over onions in dish.
Stir together crushed crackers and 1 Tbsp. melted butter; sprinkle over top of casserole.
Bake at 350° for 25 to 30 minutes or until bubbly.
*20 oz. sweet onions, peeled and cut into wedges, may be substituted. Omit boiling onions in Step 1; peel and place in baking dish as directed.