Steps:
- Mix first 8 ingredients in medium bowl until well incorporated. Cut slit lengthwise down 1 side of each olive. Stuff olives with sausage mixture, about generous 1/2 teaspoon per olive, pressing gently on olive to seal (some sausage will show). Grind panko in processor until finely ground; sprinkle 1/4 cup over rimmed baking sheet and set aside. Place remaining panko in shallow bowl. Place flour in another shallow bowl. Place egg in third shallow bowl; add 1 teaspoon water to egg and whisk to blend. Working with a few olives at a time, roll in flour to coat, then beaten egg, then panko in shallow bowl. Place on sheet. DO AHEAD Can be made 4 hours ahead. Cover; chill. Add enough oil to heavy large saucepan to reach depth of 3 inches. Attach deep-fry thermometer to edge of saucepan. Heat over medium heat to 350°F. Working in 3 batches, add olives to saucepan and cook until deep golden brown and sausage is cooked through, about 7 minutes, stirring occasionally. Using slotted spoon, transfer fried olives to paper towels to drain. Serve warm.
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