Combine grits and water in a 2-quarr casserole.
Microwave, uncovered, at HIGH for 5 minutes, stirring after 3 1/2 minutes.
Combine grits, ham, and next 7 ingredients in a bowl.
Pour mixture into a 9-inch gloss pieplate that has been coated with cooking spray.
Sprinkle cereal and paprika over top of mixture.
Place pieplate in microwave oven on an inverted saucer.
Microwave, uncovered, at MEDIUM HIGH (70% power) for 13 to 15 minutes or just until center is set, giving dish a quarter-turn after every 4 minutes.