Here is my version of saganaki. A little more exciting than Kallen's, only because fire is involved:

Ingredients:

  1. Place the cheese in a shallow bowl and cover with milk. (The cheese may float; if so, flip it halfway through soaking.) Allow to soak in the milk for 10-15 minutes.
  2. Meanwhile, heat a pan over medium-high heat. Add enough butter or oil to coat the bottom of the pan. Heat pan until oil is hot but not quite smoking.
  3. When pan is hot, remove cheese from milk and discard milk. Coat cheese with flour, shaking off excess.
  4. Fry cheese, flipping when necessary, until both sides are golden brown.
  5. Add brandy and flambé*. Bring cheese to table still flaming, and extinguish flame by squeezing lemon juice over cheese.
  6. Enjoy cheesy melty goodness with your friends!

A few notes: I generally make saganaki with kefalotiri as mentioned above, but any hard, aged Greek cheese will work. Don't try to make it with something like feta or halloumi though! Fresh cheeses just won't work right.

Some people insist on using ouzo instead of brandy, a form of deviant behavior that I cannot explain.

* About flambéing. It's not for the faint-of-heart. If it's your first time setting food on fire (deliberately), I would recommend removing the pan from the stove before adding the brandy, and using a lighter-on-a-stick to ignite the flame. If you have particularly low ceilings or if you are concerned about having a flame indoors, bring the pan outside before you set the fire to it.
To actually ignite the fire, all you need to do is touch the flame to a part of the food that has been hit with the brandy. With this in mind you should be particularly careful not to get any of the alcohol on your clothes or body. Hold the pan away from yourself before lighting it. Be safe. Have a fire extinguisher handy. I disclaim myself from any responsibility for anything that happens while you are setting your food on fire. That being said, there are few things comparable to the spectacle and flavor afforded by the act of flambéing this dish.