In a small skillet heat oil over moderate heat until hot but not smoking and cook shallots with salt and pepper to taste, stirring, until golden, about 5 minutes. Add vinegar and boil until liquid is evaporated. Remove skillet from heat and stir in bread crumbs, thyme, and salt and pepper to taste.
Season lamb with salt and pepper and arrange, ribs side down, in a small roasting pan. Spread meat side with mustard and pat on crumb mixture evenly. Roast lamb in middle of oven until a meat thermometer registers 135°F for medium-rare, 25 to 30 minutes.
Carefully transfer lamb to a cutting board and let stand 5 to 10 minutes. Slice lamb into chops.