In a large pan, combine 3 1/2 cups of water, the butter, jalapenos, garlic powder, salt, and cayenne pepper and bring it to a boil. Add the grits and stir. Reduce the heat to medium and continue stirring until the grits start to thicken. Add the sour cream, half of the Cheddar, and half of the Monterey jack and stir until creamy.

Preheat the oven broiler.

In a small skillet, add the remaining 1/4 cup water, green peppers, onions, and pimentos and cook over high heat until tender. Pour the grits mixture into a large casserole dish and top it with the cooked vegetables and ham. Add the remaining cheese on top and broil in the oven until the cheese is melted. Garnish each serving with scallions and tomatoes and serve immediately.