In a large saucepan, over medium heat, combine the water, milk, salt, pepper and 2 tablespoons of the butter. Bring the liquid to a gentle boil. Stir in the grits. Cook for 1 hour and 15 minutes, stirring occasionally. (**The grits will stick to the bottom of the pan, so make sure not to scrape the bottom of the pan. If the grits absorbed all of the water, add some hot water to thin out the grits.) Remove the pan from the heat and stir in the remaining 2 tablespoons butter and cheese. The grits can either be served immediately or prepared in advance and reheated. If preparing in advance, grease a pan with a teaspoon of butter. Pour the grits into the pan and reheat in a 400 degree F., for 15 minutes.