Reserve 1 cup flour. In large bowl, combine remaining flour (3 1/4 c), sugar, salt, yeast and cheese. heat milk and mustard until very warm (about 125F) and stir in dry ingredients. Mix in enough reserved flour to make soft dough that does not stick to bowl. Knead on lightly floured surface until smooth and elastic, about 8 minutes. Cover and let rest on floured surface 10 minutes.
Divide dough into 16 equal pieces. Roll each piece into 20 inch rope. On lightly greased baking sheets, shape into pretzels; curve ends of each rope to make circle, cross ends at top, twist ends once and lay over bottom of each circle. Cover and let rise in warm, draft-free place 15 minutes.
Brush tops with water and sprinkle with coarse salt and sesame or poppy seeds, if desired.
Bake in preheated 375F oven 12 to 15 minutes or until golden. remove pretzels to cooling racks.