Combine ground beef, pork, bread, onion, parsley, egg, salt, 1/4 tsp pepper and the pinch of nutmeg in medium bowl.
Shape mixture into 1 inch balls.
Heat 1 1/2 tsp. oil in large skillet over medium heat.
Add half of the meatballs and cook until browned, about 6 to 8 minutes; drain oil.
Transfer meatballs to paper towel lined plate.
Repeat with remaining 1/12 tsp. oil and meatballs.
Add beef and chicken broths to skillet, return meatballs to skillet.
Bring to a boil; reduce heat, cover and simmer, 30 minutes.
In a small bowl combine water and cornstarch, stir well to make a slurry.
Add to meatballs and broth.
Bring to a gentle boil to thicken.
Add remaining pepper, grated lemon peel and thyme.
Cook slowly 5 minutes longer.
Serve over mashed potatoes, buttered noodles, or steamed white rice.