Grease an 8x10 inch baking dish with butter or oil. Preheat oven to 350˚F.
Bring a large pot of salted water to a boil. Add the macaroni and cook until barely tender, al dente. Drain and set aside.
While the noodles are cooking, melt butter in a deep skillet over medium heat. Add the jalapeño, garlic, paprika, and thyme. Cook, stirring often, until fragrant, about 1 minute. Stir in the onions and continue to cook until softened. Mix in the flour and cook for another minute. Slowly add the evaporated milk. Bring to a boil, then reduce heat to medium low. Stir often to keep the bottom from burning while the mixture thickens.
In a small bowl, beat the egg. While continuously whisking, slowly add about 1/4 cup of the heated milk mixture. Once combined, slowly pour back into the pan while constantly stirring. Mix in about 3/4 of the shredded cheese, then the salt, pepper, and dry mustard until smooth. Toss in the macaroni. Season if needed. Spread in an even layer in prepared baking dish. Top with remaining cheese.
Bake in preheated oven until heated through and the cheese on top is bubbly, 20-30 minutes. Serve hot topped with fresh thyme if desired.