Bring onions to a boil in a large pot. Cover, reduce heat to medium low and simmer 45 to 50 minutes until tender. Drain well.
Melt butter in a medium sized saucepan over low heat. Whisk in flour until blended, then gradually add the half and half and milk. Increase heat and simmer 3 to 4 minutes whisking often. Remove from heat, whisk cheese until melted, then salt, nutmeg, and red pepper.
Put onions in baking dish. Pour cream sauce over top and sprinkle with cracker crumbs and paprika. Bake 25 minutes until hot and bubbly.