In a small saucepan, warm 1 tbsp oil over low heat and add 2 tsp smoked paprika, 1/2 tsp red pepper flakes, 1/2 tsp black pepper, 1/2 tsp fennel seeds, 1/2 tsp mustard seeds, 1/2 tsp garlic powder, and 1/2 tsp onion powder.
Stir the spices around in the warm oil and let the flavors bloom for about 3 minutes, then remove from heat. (Be sure to only warm the oil and not burn the spices.)
Add 1/3 cup cold water, 1 tbsp ketchup, and 1 tsp salt, and stir well.
Mix in 5 tablespoons of the vital wheat gluten with a silicon spatula, then knead in the remaining 2 tablespoons of wheat gluten with your hand.
Shape the pepperoni into a log shape and wrap it tightly in foil. (You can wrap it in a layer of parchment before wrapping it in foil if you don't want the foil to touch your food.)
Place the pepperoni into a steamer basket and steam for 40 minutes.
Allow it to cool and then slice and use as you would pepperoni.
Notes
Vital wheat gluten is a very fine powder and it gets messy fast. When adding the flour, hold the measuring cup low in the bowl so you don't have a cloud of powder.
Feel free to adjust the spices to your taste.
Reduce the red pepper for less spicy pepperoni.
Add a dash of cayenne for extra spicy pepperoni.
If you don't have a steamer basket, you can use a small amount of water and place jelly jar rings at the bottom of your pot to lift the pepperoni up out of the water. Just check and refill the water as needed.
Wash your bowl and utensils in very hot water. This will "cook" the gluten and stop it from being sticky.
The texture of your pepperoni
Small changes in the amount of vital wheat gluten you use will change the texture of the final result. More gluten gives you a firmer texture and less gives you a softer texture.
I find the best texture is achieved if you add vital wheat gluten until the dough doesn't easily absorb more, yet not so much that the dough becomes rubbery and you are not able to form it into a smooth shape.
You may also choose to omit the oil and simply add the spices to the water. This produces a very firm and chewy pepperoni, but it's also lacking the mouthfeel that fat provides. I tested it both ways many times and my family couldn't decide which one they liked better. I encourage you to play around with it until you get the consistency that you crave.
Note: Your pepperoni will continue to firm up once it cools completely.