Prepare potatoes according to package directions; salt and pepper to taste. Meanwhile, in large skillet over medium heat, cook and crumble sausage until no longer pink; drain. Set aside.
Prepare gravy according to package directions using 1 cup milk and 1 cup water. Stir in sausage. Set aside and keep warm.
Wipe out large skillet from sausage. Add butter; melt over medium-low heat. Pour eggs into skillet; salt and pepper to taste. Allow egg mixture to begin setting; slowly pull spatula across egg mixture, allowing uncooked eggs to run under cooked eggs. Continue until eggs are set.
Place potatoes on serving platter. Top with scrambled eggs, sausage gravy and shredded cheese.