Combine 3 cups of the flour, the sugar, salt and yeast in a large bowl. Stir well and set aside.
Combine milk, water and 1/4 cup of the butter in a saucepan and cook over medium heat until butter melts, stirring occasionally. Remove from heat and let mixture cool to 120 degrees to 130 degrees F.
Gradually add milk to flour mixture and beat at low speed of an electric mixer for 30 seconds. Then beat for 2 minutes at high speed. Gradually stir in the remaining flour to make a soft dough.
Turn dough out onto a lightly floured surface and knead for about 8 to 10 minutes or until dough is smooth and elastic. Place dough in a well-greased bowl, turning to grease top. Cover and let rise in a warm place for about 1 hour and 15 minutes. Punch dough down, cover and let rest for 10 minutes. Melt remaining 1/4 cup plus 2 tablespoons butter.
Shape dough into 40 balls and dip each one in the melted butter. Place the balls in two greased 9 inch square baking pans. Cover and let rise for 45 minutes.
Bake in a preheated 375 degrees F oven for 15 minutes or until rolls are golden. Brush warm rolls with any remaining melted butter.