Serve cheese puffs warm, with butter.
Preheat the oven to 400°F (190°C) and grease a baking sheet with butter, margarine or cooking oil spray.
In a saucepan, heat water and butter until the water boils and al the butter has melted. Add the flour to the pan, stirring continuously, and keep on the heat until the mixture forms a ball. Remove from the heat and allow the dough to cool down a little, for 10 minutes or so, before adding the beaten egg.
Beat in the egg, 1/4 cup at a time, until all the egg is blended. The dough should be smooth. Now is the time to mix in the shredded Cheddar cheese, cayenne pepper and dill, if using.
Drop spoonfuls of dough onto the baking sheet, at least half an inch apart, and sprinkle grated Parmesan cheese on top.
Bake for 30 minutes, or until golden brown and puffed. Remove from the oven to a wire rack and allow to cool for 10-15 minutes before serving.
The original recipe will make about 18 cheese puffs if dropping heaped tablespoons of dough onto the baking sheet.