Sauté 1 chopped onion in hot oil in a large skillet over medium-high heat 5 minutes or until tender.
Add tomato puree and next 8 ingredients. Bring to a boil; reduce heat, and simmer, stirring occasionally, 1 hour.
Combine ground beef, remaining 1 onion, jalapeño pepper, and next 5 ingredients. Shape into 40 (1/2-inch) balls. Place on a lightly greased rack in a roasting pan.
Bake at 350° for 25 minutes or until no longer pink; add to sauce in skillet, stirring gently to coat. Stir in hot sauce just before serving. Garnish, if desired.
Note: Cooked or uncooked meatballs may be frozen up to 1 month. Reheat frozen cooked meatballs in a 350° oven 10 to 12 minutes or until thoroughly heated. Bake uncooked frozen meatballs in a 350° oven 25 minutes. Freeze sauce separately; thaw in refrigerator, and cook until thoroughly heated.