Heat oven to 300°F. In medium bowl, with electric mixer on low, beat flour, sugar, butter, 1/2 cup shortening, and nutmeg until a smooth dough forms.
Roll dough into walnut-size balls, then roll each ball into a 6-inch rope. Form each rope into a circle, pressing ends together.
Arrange cookies 1 inch apart on ungreased baking sheets, and bake in upper and lower thirds of oven, switching position of sheets halfway through baking, 20 to 22 minutes, until rings are firm but still pale. Transfer to wire rack; cool completely.
Melt morsels with 1-1/2 tablespoons shortening. Dip half of each cookie into melted chocolate, and top with sprinkles. Place decorated cookies on wire racks to set.