In a small mixing bowl, cream the peanut butter, butter and vanilla. Gradually beat in confectioners' sugar. Shape into 1-inch balls. Cover and refrigerate for at least 30 minutes.
In a microwave-safe bowl, melt candy coating and shortening; stir until smooth. Dip peanut butter balls into coating; place on waxed paper. Place M&M's, plain side up, on top. Let stand until set. Use red gel to create "bloodshot" eyes.