To prepare meatballs, soak bulgur in 2 cups water for 2 minutes; drain through a fine sieve. Combine bulgur and next 7 ingredients (bulgur through 2 minced garlic cloves). Cover and chill 30 minutes. Shape lamb mixture into 18 (1-inch) meatballs; cover and chill 30 minutes.
To prepare sauce, heat oil in a Dutch oven over medium heat. Add onion; cook 5 minutes, stirring occasionally. Add 1 minced garlic clove; cook 3 minutes, stirring often. Add red wine; bring to a boil. Cook 2 minutes. Stir in 1/2 cup water, cinnamon, and diced tomatoes.
Add meatballs; bring to a boil. Cover, reduce heat, and simmer 10 minutes. Turn meatballs; cover and cook 10 minutes. Garnish with dill sprigs, if desired.