Preheat oven to 350°F. Grease bottom and sides of 11x7 baking dish. Chop onion, heat butter in skillet (med high heat) until melted. Stir in onion, saute until tender. Combine onion, soup, sour cream, milk, and pimiento in bowl; mix well.
Spoon mixture into prepared baking dish. Bake for 15 minutes.
Remove from oven and sprinkle 3/4 cup of Kraft Cheese. Arrange biscuits on top, sprinkle with remaining cheddar. Bake until golden brown. Serve immediately.