Cook potatoes in boiling water in large saucepan 15 to 20 min. or until tender; drain. Cool 10 min. Mash potatoes until smooth. Add onions, egg and pepper; mix just until blended.
Heat oven to 400 degrees F. Empty coating mix into pie plate. Roll potato mixture into 24 balls, using about 2 Tbsp. for each. Insert 1 VELVEETA cube into center of each ball, completely enclosing VELVEETA. Add, 1 at a time, to coating mix; turn to evenly coat. Place on rimmed baking sheet sprayed with cooking spray.
Bake 14 to 16 min. or until heated through. Serve with salsa.