Preheat the oven to 350°F. Coat a 3-quart baking dish with oil.

In a large bowl, mix together the beef, sausage, oats, egg, ½ cup of the parmesan, half of the parsley, ½ teaspoon salt, and ¼ teaspoon pepper until well combined. Roll into small (½-inch) meatballs and place on a large plate or baking sheet. (You should have about 82 meatballs.)

In a large skillet, heat the remaining 2 tablespoons oil over medium heat. Working in batches, add the meatballs and cook until browned on all sides, about 3 minutes. Remove the meatballs to a clean plate or baking sheet as finished.

Add the garlic and onion to the drippings in the skillet and cook over medium heat, stirring frequently, until softened, 3 to 4 minutes. Add the tomatoes with their juices, tomato paste, sugar, 2 cups hot water, and remaining ½ teaspoon salt and ¼ teaspoon pepper. Stir and bring to a simmer, then add the meatballs and continue simmering, uncovered, for 20 minutes. Remove the skillet from the heat and stir in the basil.

Meanwhile, bring a large pot of salted water to a boil over high heat. Add the pasta and cook according to the package directions to al dente. Drain.

Spread out half the pasta in the prepared dish. Sprinkle with half the mozzarella cubes, ¼ cup of parmesan, and half the meatball and sauce. Repeat with another layer of pasta, mozzarella, parmesan, and meatballs and sauce. Cover with foil and bake until hot and bubbling, 35 to 40 minutes. Allow to cool for 10 minutes and sprinkle with the remaining ¼ cup of parmesan and remaining half of the parsley.