1. In 1-quart saucepan over medium heat, in 1 tablespoon hot salad oil, cook onion until tender. Add tomato sauce, crushed red pepper, and sugar; heat to boiling. Reduce heat to low; cover and simmer 5 minutes; keep warm.
2. Clean squid as shown in diagrams at left. Slice body crosswise into 3/4-inch rings. Cut tentacles into several pieces if they are large.
3. In bowl, mix squid with egg. Onto waxed paper, measure flour. In 10-inch skillet over medium heat, heat 1/2 inch salad oil until hot. Dip squid in flour, then cook in hot oil in batches until golden, turning to brown on all sides. With slotted spoon, remove squid pieces to paper towels to drain; sprinkle with salt to taste.