Preheat your oven to 375°F. While it heats, prepare your mise en place: thaw and drain the frozen corn thoroughly (this removes excess moisture that can make the casserole watery), dice the jalapeños to your preferred heat level, dice the red bell pepper into uniform 1/4-inch pieces for even cooking, and shred the cheddar cheese fresh if you haven't already. I always use freshly shredded cheese rather than pre-shredded because it melts much more smoothly without the anti-caking agents. Set all prepped ingredients aside and have a 9x13-inch baking dish ready.
In a large saucepan over medium heat, melt the butter and softened cream cheese together, stirring frequently to combine smoothly. Once they're integrated, add the milk, salt, pepper, and garlic powder, whisking until you have a completely smooth, lump-free sauce. This should take about 3-4 minutes total. The cream cheese should be fully softened before starting so it incorporates without lumps—if it's cold from the fridge, it will seize up.
In a large mixing bowl, combine the drained corn, diced jalapeños, diced red bell pepper, and 1 cup of the shredded cheddar cheese. Pour the warm cream cheese mixture from Step 2 into the bowl and stir everything together until evenly combined, making sure all the corn and vegetables are coated with the creamy sauce. This is where all your components come together—take a moment to taste and adjust seasoning if needed, though the salt and pepper should be adequate.
Pour the entire corn and cheese mixture from Step 3 into your prepared 9x13-inch baking dish, spreading it evenly. Top with the remaining 1 cup of shredded cheddar cheese, distributing it evenly across the surface so you get consistent browning and melting.
Bake in your preheated 375°F oven for 25-30 minutes, until the casserole is bubbling around the edges and the top cheese is melted and lightly golden. I like to check it around the 25-minute mark—if the cheese on top is golden and you can see the filling bubbling at the sides, it's done. If the top needs more color, give it another few minutes. Remove from the oven and let rest for 3-5 minutes before serving, which allows the filling to set slightly and makes it easier to portion.