Bring water and milk to boil in (coverable) medium pot over high heat. Stir in pasta and reduce heat to medium-low. Cook, stirring frequently until pasta is slightly past al dente
Add American cheese, mustard, and red chili powder. Cook, stirring constantly, until cheese is completely melted
Off heat, stir in Gruyere and blue cheese until evenly distributed but not melted. Let stand 5 min
To make optional topping, heat panko, olive oil, salt, pepper over medium/high heat stirring frequently until evenly browned (3-4 min). Sprinkle parmesan on top of panko mixture
Stir pasta until smooth, the sauce will thicken as it cools. Season with salt/pepper to taste and sprinkle topping on top.