Processed cheese may be defined as a modified form of natural cheese prepared with the aid of heat, by comminuting and blending one or more lots of cheese, except certain types such as cream, cottage cheese, etc. with water, salt, colour, emulsifier into a homogeneous plastic mass
, which is usually packed while hot. http://www.dairyforall.com/cheese-processed.php
While the el-cheapo pimento cheese bought in Southern supermarkets is based on processed American cheese, I've never met anyone who uses processed cheese to make their pimento cheese at home. Cheap cheese = crappy pimento cheese. Most Southern cooks now use cheddar, usually sharp/extra sharp. Processed cheeese was basically developed to be stable when it melted. It's the reason it's so hard to make a stable cheese sauce with cheddar cheese - the cheddar wants to seperate. Even when I make mac & cheese, I add a decent amount of Velvetta as an emulsifier/stabilizer.