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Use a big pot.
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Saute chopped onions in margarine til soft but not browned.
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In small bowl, combine flour, salt and pepper.
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Stir flour mixture into onion mixture then add milk and half and half and stir and cook over medium heat until mixture begins to thicken (about 3 minutes).
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Turn off heat.
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Add 1 1/2 cups shredded cheddar to the sauce and stir til melted and smooth.
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Add sliced potatoes and stir well to combine.
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Pour mixture into a 9 by 13 casserole dish that you have sprayed with Pam.
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Cover with foil and bake at 350 for 35 minutes.
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Remove from oven, take foil off and sprinkle reserved 1/2 cup cheese over top (or more as desired).
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Return to oven to bake another 30 minutes or so or until potatoes are soft, cheese is melted and edges begin to lightly brown.
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Let stand a few minutes before serving to allow sauce to thicken.