Heat oven to 350°F. In large bowl, combine all meatball ingredients; mix well. Shape into 48 meatballs, about 1 inch in diameter. Place meatballs in ungreased 15x10x1-inch baking pan. Bake at 350°F. for 55 to 60 minutes or until meatballs are well browned; drain.
Melt margarine in large saucepan over low heat. Stir in flour, bouillon, 1/8 teaspoon nutmeg and 1/8 teaspoon pepper. Cook 1 minute until smooth and bubbly, stirring constantly. Gradually stir in 4 cups milk. Cook over medium heat until slightly thickened and bubbly, stirring constantly. Remove from heat. Add meatballs to sauce; keep warm.