Prepare bell peppers by cutting a circle in the top and pulling or cutting out the seeds. Rinse and set aside. In a bowl mix together the meat, grated onion (place a chopped onion and the 3 tablespoons of water in a food processor and process until pureed), rice, egg, 1 and 1/2 teaspoon salt and 1/4 teaspoon black pepper. Stuff peppers with this mixture and place in a roasting pan. In a saucepan, brown the chopped onion in the oil. Add all other ingredients and simmer for 10 minutes so that flavors will blend. Pour sauce over the peppers making sure that some of the sauce stays on top of the peppers. Cover and bake at 350 F for 1 hour basting once or twice. Tastes even better when reheated.