Bring a pot of salted water to a boil. Add the pasta and cook according to the package directions. Drain and set aside.
Heat the olive oil and 2 tablespoons of the butter in a pan over medium-high heat. Add the ground beef and cook, crumbling it with a wooden spoon, until browned, 5 to 8 minutes. Stir in the chili powder, cumin, onion powder, garlic powder and paprika. Stir in the diced tomatoes and chiles, hot water, 1 teaspoon salt and 1/2 teaspoon pepper and bring to a simmer. Cook until the sauce thickens, 2 to 3 minutes, then remove to a bowl (it will still be a little juicy).
In the same pan over medium heat, add the remaining 2 tablespoons butter and the milk and cook until hot and bubbling. Add the processed cheese and cook, stirring, until melted. Do the same with the Cheddar jack. Pour in the cooked pasta, add the taco meat and stir to combine. Taste and adjust the seasoning, thinning with a splash of milk if needed. Stir in the cilantro.
Top each serving with some sour cream and salsa if desired.