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Soak bread in milk in a small bowl until softened, about 4 minutes.
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Cook pancetta, onion, and garlic in 1 Tbsp oil with 1/2 tsp each of salt and pepper in a 10-inch skillet over medium heat until onion is softened, about 6 minutes. Cool slightly.
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Squeeze bread to remove excess milk, then discard milk. Lightly beat egg in a large bowl, then combine with chicken, pancetta mixture, bread, and parsley. Form 12 meatballs and arrange in another 4-sided sheet pan.
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Stir together tomato paste and remaining Tbsp oil and brush over meatballs, then bake in upper third of oven until meatballs are just cooked through, 15 to 20 minutes.
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Toss bell peppers with caper mixture. Serve meatballs with peperonata.