Combine first 6 ingredients in large Dutch Oven. Bring to a boil; cover, reduce heat, and simmer for 20 minutes.
Combine milk and flour, stirring until smooth. Add milk mixture and cheese to vegetable mixture in Dutch oven. Cook over medium heat, stirring constantly, until cheese melts and mixture thickens. If desired, garnish with dried red pepper.
For a touch of "heat" stir 1/4 teaspoon dried crushed red pepper into the soup just before serving.