In a large skillet cook mushrooms, onion, sweet pepper, shallots, garlic, and parsley in the 2 tablespoons hot butter until tender. Add undrained tomatoes, salt, and ground red pepper. Heat to boiling; reduce heat. Simmer, uncovered, about 10 minutes or until desired consistency.
Meanwhile in a shallow bowl combine egg and milk. Dip shrimp into egg mixture, then into flour to coat. In another skillet, fry shrimp in the 1/4 cup hot butter about 5 minutes or until shrimp are opaque and coating is golden and crisp, turning once.
Transfer tomato mixture to a shallow serving dish; arrange shrimp in tomato mixture. Serve with French bread. Makes 4 servings.