From the March, 2000 issue of Cook's Illustrated, my favorite way to do oatmeal. Serve it with maple syrup or (fattening but delicious) butter and cream or honeyed fig topping (posted separately) or Rita's wonderful Lavender Infused Honey.
Bring water and milk to simmer in large saucepan over medium heat. Meanwhile, heat butter in medium skillet over medium heat until just beginning to foam; add oats and toast, stirring constantly with wooden spoon, until golden and fragrant with butterscotch-like aroma, 1 ½ to 2 minutes.
Stir toasted oats into the simmering liquid, reduce heat to medium-low; simmer gently, until mixture thickens and resembles gravy, about 20 minutes.
Add salt and stir lightly with spoon handle. Continue simmering, stirring occasionally with wooden spoon handle, until oats absorb almost all liquid and oatmeal is thick and creamy, with a pudding-like consistency, about 7 to 10 minutes.
Off heat, let oatmeal stand uncovered 5 minutes. Serve immediately.