Preheat oven to 325 degrees F (165 degrees C). Grease an 11×8 inch baking dish.
Brown sausage in a large skillet; drain fat.
Combine sausage with green onion and spread evenly across the bottom of the baking dish. Top with shredded cheese. Whisk together eggs, water, milk, and gravy mix; add mixture to baking dish. Arrange bread squares evenly on top. If desired, drizzle melted butter over bread, and sprinkle with paprika.
Bake 40 minutes in the preheated oven, or until a knife inserted into the center comes out clean. Set aside 10 minutes before serving.