To make the oats, in a large saucepan, bring the water and milk to a slow boil. Meanwhile, melt the 2 tablespoons butter in a frying pan and add the oats. Toast the oats for about 15 minutes, until golden and toasty. Add the oats and the salt to the boiling water, and cook, stirring occasionally, until thick and creamy (but not mushy), about 30-40 minutes.
Meanwhile, to make the apples, cut the apples into medium chunks. Melt the butter in a frying pan, then add the apples, sugar, and cinnamon. Cook, stirring occasionally, until crisp-tender and caramelized, about 15 minutes.