Chili Con Queso - Casa Ole

5 pounds american cheese -- grated
3 1/4 cups water -- divided (26 ounces)
1 1/2 cups chopped onion -- * see note
1 cup chopped celery
1 cup green bell peppers -- chopped
1/4 cup finely chopped jalapeno -- *see note

Combine cheese and 3 cups water in the top of a double boiler and bring to a boil. Stir every 5 minutes. While cheese is melting, combine onion, celery, bell pepper and jalapeno in saucepan and add 1/4 cup water. Sautee over medium heat until vegetables come to a light boil. When cheese has melted and is smooth, add vegetables and mix thoroughly. Simmer 5 minutes. This makes a large amount; recipe could be cut in half or thirds.