Add all the horseradish sauce ingredients together in a bowl and stir together to combine. Set aside.
Add canola or vegetable oil to a large Dutch oven so the oil is about 4 inches deep. Set over medium heat. Place a candy thermometer into the oil to monitor the temperature.
Slice off the root end of the onion. Cut onion in half. Peel off paper skin and discard. Slice onion halves in half again and then into quarters. Separate onion pieces into petals and place into a ziploc bag. Set aside.
Mix flour, salt, peppers, onion powder, garlic powder, and paprika in a medium bowl. Add ¼ cup of mixture to the bag of onions. Seal the bag and shake to coat the onions evenly.
Set up dredging stations by adding buttermilk and egg to a medium bowl and whisking together. Set bowl of flour next to it. Place an empty baking sheet next to the flour.
Pour about ⅓ of the onions into the buttermilk and coat evenly. Remove the onions from the buttermilk and drain off excess. Toss in the seasoned flour until completely coated in flour. Shake off excess and set on empty baking sheet. Repeat with the rest of the onions.
Once the oil reached 365 degrees, add about ¼ of the breaded onion petals to fry for about 3 minutes. Flip and fry until deep golden brown, about 3 more minutes. Remove and place on cooling rack over a baking sheet to help drain excess oil. Repeat in 3 more batches with the rest of the onion petals.
Let cool for 5 minutes and then serve hot with horseradish dipping sauce.