Stuff chilies with Monterey Jack cheese strips (or use a mixture of Monterey Jack and longhorn, if preferred).
Arrange stuffed chilies side by side in a greased shallow baking dish.
Beat eggs with an electric mixer until thick and foamy.
Add milk, flour and baking powder.
Beat until as smooth as possible (batter will be a little lumpy).
Pour batter over chilies, making sure that all the chilies are moist.
Sprinkle with longhorn cheese.
Bake, uncovered, in a 375°F oven 25 minutes, or until casserole is puffed and appears set.
Just before casserole is ready, heat seasoned tomato sauce to serve in a gravy boat.
Garnish hot casserole with chopped olives.