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Melt Butter in a large pot over medium heat. Add onion and cook, stirring occasionally, until onion begins to brown, about 5 minutes. Stir in flour; add milk slowly, stirring. Add potatoes and stir to mix. Bring to a boil. Stir in 3/4 cup of cheese, salt and pepper.
Pour mixture into prepared baking dish and level out surface. Bake for one hour, uncovered. Cover and bake until potatoes are fork tender, about 20 minutes more.
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