In a large skillet, cook sausage over medium heat until no longer pink; drain on paper towels. In a large bowl, combine 1-3/4 cups cheese and the next seven ingredients; fold in potatoes.
Spread half into a greased shallow 3-qt. baking dish. Top with sausage and remaining potato mixture. Sprinkle with remaining cheese. cover and bake at 350° for 45 minutes. Uncover; bake 10 minutes longer or until heated through. Yield: 10-12 servings.