Make the meatballs: In a mixing bowl, combine the breadcrumbs with the beaten egg, and parmesan. Let the mixture sit for 10 minutes. Place the chopped pepperoni, onion, and garlic in the bowl of a food processor and pulse until everything is finely chopped. Stir that mixture into the soaking breadcrumbs. Add the parsley, salt, pepper, ground beef and pork to the bowl and use your hands to mix the ingredients until everything is just mixed.
Bake the meatballs. Preheat an oven to 400 F, with the oven rack in the top 1/3 of the oven. Line a rimmed baking sheet with foil or parchment paper. Use a 1/4 cup (2 oz) scoop to portion out the meatball mixture and roll them into balls. Place the meatballs on the prepared baking sheet. Bake for 10 minutes, then broil on high for 2-3 minutes until the meatballs are browned. Remove from the oven.
Make the vodka sauce. In a large braiser or skillet, heat the olive oil over medium heat. Once the oil is hot, add the finely diced shallot and sliced garlic. Cook for 2-3 minutes, stirring often, until the onion is soft and the garlic is fragrant. Stir in the crushed red pepper and oregano and cook for another minute. Add the tomato paste and cook for 2-3 minutes, until dark in color. Then, stir in the crushed tomatoes, sugar, and season with salt and pepper. Simmer the sauce for 10 minutes. Remove from the heat, add in the vodka, and return to the heat and bring to a simmer for another 10 minutes. Stir in the cream and season to taste with salt and pepper.
Simmer the meatballs in the sauce. Add the meatballs to the sauce, leaving any fat behind on the baking sheet. Baste the meatballs with the sauce. Reduce the heat to very low, cover, and simmer the meatballs for 15-20 minutes, until very tender and cooked through.
Serve. Serve the meatballs over pasta, polenta, or with crusty bread on the side. Top with more grated parmesan.