Soak the bread in the milk. Combine the bread, eggs, horseradish, salt, and pepper in a mixing bowl; beat well at medium speed of an electric mixer.
Add the ground beef; mix well. Shape mixture into 1 inch balls. Place on a rack in a shallow roasting pan. Bake at 450 degrees for 10 to 15 minutes. Place meatballs on a papertowel covered plate to absorb any excess grease.
Combine the ketchup and remaining ingredients in a saucepan; cook over medium heat until bubbly, stirring occasionally.
Add the meatballs to the sauce, and cook until thoroughly heated. Serve warm.