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1. In a large skillet cook chorizo over medium heat until browned. Using a slotted spoon, transfer chorizo to a bowl, reserving 1 tablespoon drippings in skillet. Add onions to drippings in skillet; cook and stir over medium heat about 10 minutes or just until tender. Stir in chile peppers and sweet pepper; cook about 5 minutes or just until peppers are tender. Remove from heat. Stir in chorizo.
2. Lightly grease a 3-quart rectangular or oval baking dish. Spread half of the bread cubes in the prepared dish. Spoon half of the chorizo mixture over. Repeat layers.
3. In a large bowl whisk together eggs, milk, oregano, and paprika. Pour evenly over layers in baking dish. Cover with foil. Chill for at least 2 hours or up to 24 hours.
4. Preheat oven to 325 degrees F. Bake, covered, for 30 minutes. Uncover. Bake for 30 to 45 minutes more or until an instant-read thermometer inserted in the center registers 170 degrees F. Sprinkle with cheese for the last 5 minutes of baking. Let stand for 10 minutes before serving. If desired, sprinkle with cilantro.