Melt butter, stir in flour, and blend until smooth.
Add milk and cook until sauce is thick.
Add 2 cups of the cheese and cook, stirring occasionally, until cheese is melted; remove from heat.
With a fork beat egg yolks with salt and pepper; slowly stir into sauce.
Beat egg whites until stiff but not dry; slowly add cheese sauce to egg whites, folding together carefully.
Turn half of the souffle mixture into ungreased 1 1/2 -quart casserole.
Sprinkle remaining cup of shredded cheese on this, then top with sliced green chili peppers, using about 2/3 cup (1 1/4 cans).
Add remainder of souffle mixture.
Bake in a moderately slow oven (325°) for 40 minutes, or until set.
While souffle is baking, simmer the tomatoes with the remainder of the chili peppers.
Spoon tomato sauce over each serving of souffle.