Melt the butter in a saucepan and stir in the flour with a wire whisk. When blended, add the milk and cream, stirring vigorously with the whisk. Continue stirring and cooking until the sauce thickens. Add salt and pepper and continue to simmer for 5 or 10 minutes longer.
Remove the sauce from the heat and stir in the yolks, beating rapidly. Add the cheese and when it melts stir in the sherry. Keep hot but do not boil or the excess heat will make the yolks curdle the sauce.
Place a toasted muffin half on each of six plates and top each with 2strips of bacon. Add a poached egg to each plate and cover with the sauce. Sprinkle with paprika and garnish each plate with a few sprigs of watercress.