Preheat oven to 375°F Grease a 24-cup mini muffin pan. In a large bowl, whisk together the flour, baking powder and oregano; whisk in the milk and egg. Stir in the mozzarella and pepperoni; let stand for 10 minutes.
Stir the batter and divide among the mini-muffin cups. Bake until puffed and golden, 20 to 25 minutes.
Warm the pizza sauce, then stir in 1 tablespoon basil. Sprinkle the puffs with the remaining 1 tablespoon basil. Serve the puffs with the pizza sauce for dipping.