In a large bowl, combine peanut butter and butter. Stir in cereal and confectioners' sugar until well combines. With buttered hands, form into 1-in. balls. In a microwave melt candy coating and shortening until smooth. Dip balls into coating; allow excess to drip off. Place on a waxed paperlined baking sheet. Before coating is cool, press an M&M into the center of each ball. Cool completely.
Using a small round pastry tip and red icing, pipe small wavy lines on the sides of balls to resemble bloodshot eyes. Use black icing frosting and a small round pastry tip to add a dot in the center of M&M for pupil.