Brown sausage in a large skillet, stirring until it crumbles. Drain well, and set aside.
Bring water and chicken broth to a boil in a large saucepan; stir in salt and grits then return to a boil. Cover pan, reduce heat to medium and simmer 10 minutes, stirring occasionally. Remove from heat; add cheese, milk, butter, garlic, paprika and cayenne pepper; stirring until cheese melts. Stir in sausage and eggs.
Spoon mixture into a lightly greased 13" x 9" baking dish and bake, uncovered at 350�F for 45-55 minutes or until golden and bubbly and a knife inserted in the middle comes out clean. Let stand 15 minutes before serving.