Shred 8oz of the sharp cheddar cheese using the large holes of a box grater. Dice the remaining 2oz and set aside.
In a medium heavy-bottomed saucepan, melt 3 Tbsp. Of salted butter over medium heat. Add the flour and dry mustard powder. Whisk constantly, until the mixture is just a little bubbly and starting to change color ever so slightly. Slowly pour in the milk, whisking constantly as you pour to smooth out the lumps. Keep whisking until all the milk is added and the sauce is lump free.
Add the salt, sugar and black pepper to the sauce and whisk well.
Simmer the sauce, whisking frequently, until it has thickened slightly, about 3-5 minutes.
Remove the sauce from the heat and add the cheese. Whisk until all the cheese is melted and incorporated.
Add the cheese sauce to the drained pasta and toss well to combine. Once the sauce is well distributed, add the diced cheese cubes. Toss well again. Pour the pasta shells and cheese into the greased 9X13 casserole dish.