Place racks in upper third and middle of oven and preheat to 350°. Lightly coat an 8x8" baking pan, preferably metal, with nonstick vegetable oil spray. Line with 2 sheets of overlapping parchment paper, leaving a generous overhang on all sides. Lightly coat parchment with nonstick spray. Process 8 oz. extra-sharp orange cheddar, coarsely grated, 1¾ cups (219 g) all-purpose flour, ½ tsp. baking powder, ⅓ cup (67 g) granulated sugar, and 2 tsp. Diamond Crystal or 1¼ tsp. Morton kosher salt in a food processor until cheese has almost disappeared into mixture and no large pieces remain. Add ½ cup (1 stick) chilled unsalted butter, cut into ½"-thick pieces, and process until combined and mixture holds together when squeezed in your hand. (Dough will look dry and crumbly at first but will eventually come together.)

Add about two thirds of dough to prepared pan; press into an even layer across bottom with your hands. Crumble remaining dough over a parchment-lined baking sheet into dime-size pieces. Bake streusel on top rack and shortbread base on middle rack until streusel is golden brown and crunchy, 17–22 minutes, and shortbread is golden brown and firm, 32–38 minutes. Let both cool.

Meanwhile, heat remaining ¾ cup (150 g) granulated sugar and ¼ cup water in a medium saucepan over medium, swirling pan if needed (do not stir), until sugar is dissolved and syrup is boiling, 5–7 minutes. If sugar crystals start to form on sides of pan, brush with a wet pastry brush to dissolve. Continue to cook caramel, swirling occasionally, until deep mahogany and wisps of smoke rise from the surface, 10–14 minutes more. (Watch it closely; it can go from perfectly caramelized to burnt quickly. It’s better to skew slightly over-caramelized than under.)

Remove caramel from heat and immediately add remaining ¼ cup chilled unsalted butter, cut into ½"-thick pieces (be careful as it will foam vigorously). Using a heatproof rubber spatula, preferably with a long handle, stir vigorously until butter is melted (it may look curdled at this point). Add ½ cup sweetened condensed milk and remaining ¾ tsp. Diamond Crystal or ½ tsp. Morton kosher salt; stir until smooth. Pour evenly over cooled shortbread; spread with an offset spatula if needed. Immediately crumble streusel over, breaking up larger pieces (you want them chickpea-size). Scatter 1 cup caramel popcorn on top, then gently press both into caramel (be careful; it will still be hot). Chill at least 1 hour.

Run an offset spatula around edges of shortbread, then lift out of pan with parchment and transfer to a cutting board. Cut into thirds; cut each third into 6 rectangles to make 18 total. (For clean edges, score bars with a thin, sharp knife, cutting through topping and caramel, then use a serrated knife to saw gently through shortbread.) Do Ahead: Shortbread can be made 2 days ahead. Cover and keep chilled.