Bring the water just up to a simmer and then add the mushrooms. Allow to steep for 30 minutes before using in recipes. Strain before using.
In a medium saucepan, bring the stock to a simmer. Keep warm.
In a large saucepan, heat the olive-oil and add the mushrooms. Season with salt and pepper and cook over moderate heat, stirring, until softened, about 5 minutes.
Add the shallots and saute for another few minutes until the mushrooms are nicely caramelized and the shallots are cooked through and translucent.
Add the rice and cook, stirring until well coated with olive oil and beginning to toast. Add the wine and cook, stirring until the wine is absorbed. Add 1 cup of the warm stock and cook over moderate heat, stirring constantly, until nearly absorbed.
Continue adding the stock 1/2 cup at a time, stirring constantly, until it is nearly absorbed between additions. The risotto is done when it is opaque and the sauce that has formed from the rice is creamy, about 20 minutes total. Add the truffle oil and cheese in at the very end, and adjust the seasoning with salt and pepper.
Mix together 1/2 cup of bread crumbs and the beaten egg with the cooled risotto.
Heat 2" of robust olive-oil to 350 F in a heavy pot with relatively high sides. Preheat the oven to 250 F. Place the breadcrumbs in a shallow dish or plate for rolling the arancini.
Using a scoop or spoon, portion out 2 tablespoons of risotto mixture and roll into a ball. Gently push one piece of mozzarella into the center of each ball and re-roll between your hands to encase the cheese.
Roll the ball in the bread crumbs to fully coat and fry until golden brown. Place the fried hot ball of arancini on a rack and hold in the oven while frying the rest. Serve hot with the cheese melting in the center.
Add all of the ingredients to the the container of a a blender or food processor. Pulse to combine and adjust seasoning with salt if desired. Serve with the arancini.