Heat oven to 350°F. In large bowl, combine all casserole ingredients; mix well. Spoon into ungreased 2-quart casserole; set aside.
In medium saucepan, bring water and margarine to a boil. Remove from heat. Stir in potato flakes and milk. Add egg; blend well. Spoon and spread over casserole.
Bake at 350°F. for 35 to 45 minutes or until thoroughly heated. Sprinkle with cheese and paprika. Bake an additional 3 minutes or until cheese is melted.