Jalapeno Cheese Grits

I got this recipe from my little sister.  She made this for my birthday this past year.  I just made it for the Superbowl and it was a big hit.

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3 cups water
1/2 teaspoon salt
1 cup quick-cooking grits
1/4 cup butter
6 ounces Velveeta cheese, cubed
2 eggs 
1/2 cup milk
1/2 tsp. salt
1/4 tsp. pepper
1/2 cups pickled jalapenos, chopped
1-2 cups Pepper Jack cheese, grated (according to taste)

Bring water and salt to a rapid boil. Add grits, reduce heat and cook until grits are thickened. About 3-4 minutes.  Stir in butter and Velveeta until melted.  Mix eggs, milk and pepper together.  Add to the grits mixture. Stir in the jalapenos.  Pour into 2 quart casserole dish.  Bake uncovered for 45-1 hour, or until set in a 300 degree oven.  Sprinkle jack cheese on top, return to oven for 15 minutes.