In a large bowl add all the meatball ingredients, except the peanut oil, and mix well using your clean hands. Shape the meat mixture into 1 inch meatballs. You should get around 40 meatballs.
In a skillet heat the peanut oil over medium heat. Add the meatballs and fry until golden all around, should take about 7 minutes. If your skillet isn't large enough you may need to do this in a couple batches. Transfer the meatballs to a plate and set aside.
Trim the top and base of the lemongrass stalks and peel off any dry or tough outer layers. Using a meat mallet, pound the lemongrass stalks until well bruised to release the flavor.
In the same skillet that was used to fry the meatballs add the chicken broth, red curry paste, unsweetened coconut milk, curry powder, salt, pepper, Kaffir lime leaves and lemongrass. Stir everything together and bring to a boil.
Add the meatballs back to the skillet, toss them around to cover them in the sauce, then cook for another 8 to 10 minutes, uncovered over medium-low heat.
Remove the lemongrass and lime leaves from the sauce.
If you're adding the shredded coconut, add it now and stir. I added this for a bit of sweetness to the sauce, but this is totally optional. You could also add a tsp or so of brown sugar.
Garnish with cilantro and serve over cooked rice.