Butter a 9X13" baking dish. In a large saucepan, melt the butter. Add the bacon and cook over moderate heat until crisp, about 7 minutes. With a slotted spoon, transfer the bacon to a plate.
Add the onion and bay leaves to the saucepan and cook over moderate heat, stirring occasionally, until the onion is softened, about 5 minutes. Add the paprika and cayenne and cook, stirring, until fragrant. Stir in the flour until blended. Gradually whisk in the milk until the sauce is smooth. Bring to a boil over high heat, whisking constantly, and cook until thickened. Reduce the heat to low and simmer the sauce gently for 30 minutes, whisking frequently. Discard the bay leaves.
Meanwhile, bring a large pot of salted water to a boil over high heat. Add the macaroni and boil over high heat. Add the macaroni and boil about 4 minutes. Drain the macaroni and return it to the pot.
Stir 4 cups of the cheddar into the hot sauce; add the bacon and season with salt. Add the sauce to the macaroni and mix well. Spread the mac and cheese in the baking dish and scatter the remaining 1 cup of cheddar on top.
Bake for about 30 minutes until golden brown. Let stand for 10 minutes before serving.
The assembled mac and cheese can be refrigerated overnight. Bring to room temperature before baking.