Chill the blade of the food processor in the refrigerator for 15 minutes prior to use. Cut sausage into chunks and place chunks in a food processor and grind.
Preheat oven to 400℉. In a small saucepan, bring 2 cups of water to a boil. Slowly stir in grits. Reduce the heat to medium-low; cook, covered for 5 minutes or until thickened, stirring occasionally. Remove from heat. Stir in the cheese, butter, pesto, ¼ teaspoon salt and ⅛ teaspoon pepper until blended.
Meanwhile, in a large skillet, cook red pepper over medium heat for about 4 minutes. Add sausage to heat through for approximately 2 more minutes. Drain excess liquid and place into a bowl. Set aside.
In a small bowl, whisk 6 of the eggs and the remaining salt and pepper until blended. Melt butter in skillet and scramble eggs until they are thickened and no liquid egg remains. Fold scrambled eggs into sausage mixture.
Unfold each of the puff pastry sheets onto a 12 x 10-in. sheet of parchment. Spread grits up to 1/2 in. from the edges. Spoon the sausage mixture over half of the grits on each pastry. Fold pastries over the sausage mixture to enclose; press the edges with a fork to seal. Transfer to a baking sheet.
In a small bowl, whisk remaining egg and water; brush over pastries. If desired, top with additional ground pepper. Bake for approximately 15 minutes, or until golden brown. Let stand for 10 minutes. Let stand for 10 minutes. Cut each pastry into 4 pieces.