Here goes, but you should consider this a discussion-starter and placeholder rather than a serious treatment.
Consulting with the Dictionary of American Regional English, the usual starting point for American dialect words, you find little, just the old meaning 'stupid or awkward person'. This is seriously outdated, especially here in Wisconsin, where people are bursting with cheesehead pride. Seriously.
Even asking the DARE brain-trust turned up little by their high standards, but provided the guts of the post below. (Multiple HTs to JH and LvS, of course.) They call attention to a discussion in the famous Jim Leary's Wisconsin Folklore (1998, 13):
"Cheesehead" is … double-edged. Wisconsin cheese is known throughout the country. Billboards across Wisconsin, and particularly along the southern border with Illinois, tout the cheese, which tourists purchase from specialty shops. In the mid-1980s, when designs were submitted to replace the state's butter-colored license plates, then governor Tony Earle parodied New Hampshire's "Live Free or Die" motto to suggest that Wisconsin's might be "Eat Cheese or Die." Meanwhile, diehard fans of the Green Bay Packers and Milwaukee Brewers began appearing at games wearing on their heads cardboard triangles that were painted to resemble wedges of Swiss cheese. . . . Such regalia sparked a goofy pride in Wisconsin's chief export and its agrarian tradition. But the wedges have also exposed cheeseheads to taunts that they are rubes with brains of curdled milk. . . . Chicagoans seek respite in the slower, rural rhythms of Wisconsin. Perhaps a few mistake their neighbors' style as a sign of stupidity.In the same spirit, DARE staff report the story that "this term was developed by a White Sox (or Cubs) fan/commentator as an insult directed at the Milwaukee team originally."
One story from the DARE files suggests that the actual Packers cheesehead (go here for the original item — it's also the source of the image below) led to the term, but the chronology is presumably the other way around.
The term surely has roots in Europe, where terms like Dutch kaaskop and German Käsekopf are well-known and often negative. UrbanDictionary, in fact, has this:
Slang(can also be used offensively) for a Dutch person. "Kaaskop" means "cheesehead" in Dutch. Because the Netherlands is very well known for its cheese.Various people report no particular national/ethnic association in German, by the way. But how do we get to Wisconsin? I'm guessing multiple sources push toward making the term a plausible nickname. The large Dutch and German populations here would have brought the term over and the constant topic of 'nationality' in popular Wisconsin culture would have kept that going. The actual cheese production in the state certainly would have encouraged the term — and note that the diary industry here is not a German import, while we're at it.
More to follow, I hope. In the meantime, eat cheese or die, I guess.
Top image from here.