1. Adjust oven racks to upper and lower thirds of oven and heat oven to 425 degrees F. Line two large baking sheets with parchment paper or nonstick baking liners and set aside.
2. In a medium saucepan, bring water, milk, butter (cut into 8 pieces), salt, cayenne, and nutmeg to boil, stirring constantly, over medium-high heat. Remove from heat and add all the flour at once. Beat vigorously with a wooden spoon to form a ball; continue beating until ball no longer sticks to sides of pan. Return pan to medium heat and continue beating and smearing the paste in the pan to dry it out a bit, about 2 minutes.
3. Transfer mixture to a food processor bowl and, with feed tube open, process briefly to cool, about 15 seconds. Stopping the motor as necessary to scrape down the bowl, add eggs and egg white one at a time, making sure each egg is incorporated before adding the next (batter will be glossy and smooth). With motor still running, add Gruyhre and Parmesan and process until cheese is incorporated fully. Alternatively, transfer mixture to a bowl and mix in eggs and cheese using a wooden spoon.
4. Transfer batter to a pastry bag fitted with a 1/2-inch tip or a large, heavy resealable plastic bag. Press batter to base of pastry bag or corner of plastic bag; if using plastic bag, snip off 3/4 inch of one corner with scissors. Squeeze dough onto prepared baking sheets in 1 1/2-inch mounds (about the size of small walnuts), spaced 2 inches apart. Alternatively, use a teaspoon to scoop small balls of dough and place on baking sheet. If desired, use the back of a teaspoon dipped in cold water to refine the shape and smooth the surface of the mounds.
5. Bake at 425 degrees F, without opening oven door, for 15 minutes. Reduce heat to 375 degrees F and continue baking until puffs are golden brown, firm, crusty, and have doubled in size, about 12 additional minutes.
6. Remove puffs from oven and turn off heat. Using the tip of a sharp paring knife, cut a 3/4-inch slit into the side of each puff to release steam, and return puffs to shut-off oven, propping door open with a wooden spoon. Allow puffs to dry and cool slightly, about 10 minutes, and serve. (Gougeres can be cooled completely, placed in a resealable plastic bag, and stored at room temperature for 24 hours or frozen for one month. To serve, crisp room temperature gougeres in a 300 degrees F oven for about 5 minutes, or frozen gougeres for about 10 minutes.)
Source: Hannaford fresh Magazine, November - December 2007