Place the yeast in a small bowl, set aside.
Take 1/4 cup of the butter and slice it very thin, place it into a large heatproof bowl. Add the sugar and salt, set aside.
Add the water to a small saucepan and warm the water until it reaches 110°F. Pour ¼ of the water into the bowl with the yeast, stir it a few times, and let sit on the counter to activate the yeast, about 5 minutes. The yeast will become bubbly and foamy.
While the yeast is activating, pour the remaining warm water into the bowl with the butter slices. Whisk it together, use the whisk to break up the pieces of butter. Most of the butter will melt, but there will still be a few larger pieces floating around, that is okay. Set aside.
In a large bowl, add the flour, 1 cup of the mozzarella, ¼ cup of the parmesan, the Italian seasoning, and garlic powder, whisk to combine. Set aside.
Once the yeast is activated, pour it into the water/butter mixture and whisk to combine. Add the egg and whisk to combine. Pour the wet ingredients into the dry ingredients and stir together with a spoon until a batter just comes together. The mixture will be extremely sticky.
Dust a clean work surface generously with flour. Turn out the dough and dust the top with more flour. Knead 20-30 times until it turns into a smooth dough. You may need to add more flour to the work surface a few times during the process so it doesn’t stick.
Add the vegetable oil to a large bowl and brush it up the sides. Add the dough to the bowl and roll it around in the oil.
Cover with plastic wrap and let it double in size. This will take about an hour and a half. When done, punch dough down.
Once the dough has risen, dust the clean work surface again with flour. Turn out the dough onto the work surface and lightly dust the top with flour. Roll it out with a rolling pin into a 12x16 inch rectangle.
Melt the remaining ½ cup of the butter. Brush a 9x13 with a thin coat of butter. Brush the top of the dough with more butter.
Sprinkle the remaining parmesan cheese on top, keep about ½ inch border along the edge of the dough bare.
Top evenly with the mozzarella.
Then the pepperoni.
Start with one of the long edges facing you, as tightly as you can, roll the dough over the filling into a log. Cut into 15 equal pieces, I find a serrated knife helps to do this easiest.
Place the rolls, cut side down into the greased baking dish. There will be 5 rows of 3 rolls.
Cover the dish with plastic wrap and let the rolls rise again until about doubled in size, about an hour.
Preheat the oven to 350°F. Bake the rolls for 22-28 minutes until golden brown on the tops.
Once they are done baking, immediately brush the tops with the remaining melted butter. Let cool slightly then serve warm with marinara sauce for dipping.