In a saucepan, bring water to a boil. Slowly whisk in the grits and 1/2 teaspoon salt. Reduce heat; cover and simmer for 5 minutes, stirring occasionally., In a large bowl, combine grits, sausage and 1-1/2 cups cheese. Beat the eggs and milk; stir into grits mixture. Add the butter, pepper and remaining 1/4 teaspoon salt., Transfer to a greased 13x9-in. baking dish. Bake, uncovered, at 350° until a knife inserted in the center comes out clean, about 1 hour. Sprinkle with remaining 1/2 cup cheese; bake 15 minutes longer or until cheese is melted. Let stand for 5 minutes before cutting.