Preheat oven to 350°F. Grease a 2-quart baking dish or spray with nonstick cooking spray. Set aside.
In a large saucepan, bring water to a boil. Add the salt, and then gradually stir in the grits. Lower the heat to medium-low or low, and cook, whisking constantly, until thickened, about 5-7 minutes. Remove from the heat.
Stir in the butter, 1 cup of cheddar cheese, diced pimentos, garlic powder, black pepper, and cayenne. Let cool for 10 minutes.
In a small bowl, whisk together the eggs and milk. Add the eggs and milk to the grits; whisk well to combine.
Pour the grits mixture into the prepared casserole dish. Sprinkle remaining ½ cup of cheddar cheese on top.
Bake, uncovered, for 45 minutes – 1 hour, until just set. Garnish with sliced green onion or chopped fresh parsley and serve!