Combine meats, bread, onion, parsley, egg, salt, 1/4 teaspoon pepper and the pinch of nutmeg in medium bowl.
Shape mixture into 1 inch balls, wetting hands as needed will help.
Add half of the meatballs to lightly oiled or sprayed large skillet over medium heat. Cook until browned all over, about 6 to 8 minutes. Transfer meatballs to paper towel lined plate. Repeat until all meatballs are browned.
Add beef and chicken broth to skillet and stir to deglaze, getting all the browned bits from the pan bottom. 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 and bring to a gentle boil to thicken.
Add remaining pepper, grated lemon peel and thyme and simmer for 5 minutes.
Serve over mashed potatoes, buttered noodles, or steamed white rice.
Makes 6 servings.
Note: If your family really likes gravy you may want to double the ingredients for gravy only.