Heat oil in skillet over medium heat and add onion, garlic and green pepper and cook stirring until softened (5 minutes). Stir in cumin and cook another minute.
Stir in tomatoes, water and chilies and bring to a boil over high heat. Reduce heat to medium low and simmer, stirring occasionally until thickened (15 minutes). (I also thought it would be great to add 1 can of chopped black olives).
Brush 1 side of each tortilla with oil and cut into 1 inch strips -- place on baking sheet and bake until crisp (10 minutes). Set aside.
Reduce oven temp to 350-degrees F.
Layer half of the tortilla strips in baking dish and top with half of the sauce and half of the cheese. Repeat layers.
Bake until cheese is melted and casserole is bubbly -- 20-30 minutes.
Serve with sour cream, salsa and chopped jalapenos, if desired.