Preheat oven to 375°F.
To make the meatballs, in a large bowl, mix together the ground beef, sausage, egg, bread crumbs, salt, pepper, basil, parsley, and red pepper (if using) until well combined. Roll about 2 tablespoons or so of the mixture in between your palms and place a baking sheet or platter. Continue rolling and shaping the remaining mixture until all the meatballs are done.
Heat a very large oven-safe skillet, over moderate heat. Once hot, drizzle in the oil and place in half of the meatballs. Cook until browned on both sides, about 3 to 4 minutes per side. We're not looking to cook the meatballs all the way at this point, just develop color and flavor. Transfer to a plate and continue browning the second batch.
Stir in the onion, garlic, bell pepper and mushrooms into the same skillet, picking up any browned bits on the bottom of the pan. Cook until softened and just beginning to brown, about 8 to 10 minutes. Once the veggies have started to brown, season with a pinch of salt, pepper and red pepper flakes (if you like a bit of a kick).
Meanwhile, to make the pizza sauce, combine all of the ingredients in a food processor or blender and pulse until smooth.
Pour the sauce into the skillet with the veggies and add in the black olives, giving it all a stir until combined. Nestle in the meatballs in a single layer, lower the heat and bring to a simmer. Cover the top with pepperoni slices and then sprinkle with cheese. Bake until the sauce is bubbly and the cheese has melted, about 18 to 20 minutes.
Carefully remove from the oven and garnish with fresh basil before serving. Serve with crusty bread slices. Enjoy!