Bring water, butter, salt, and pepper to a boil in a saucepan. Add flour quickly, all at once, beating with a wooden spoon until mixture forms a ball that leaves sides of pan. Remove from heat. Add eggs to flour mixture, one at a time, beating well after each addition (mixture will separate as each egg is added to it). Set aside 2 tablespoons diced Cheddar cheese; stir remaining cheese into flour mixture. Drop dough by rounded tablespoonfuls (about 11) onto a greased baking sheet to form an 8" ring, leaving a 2-1/2 to 3-inch diameter hole in center. Sprinkle reserved cheese over top. Bake at 425 degrees for 50 to 55 minutes or until puffy and golden brown. Serve hot.