Preheat oven to 350°F.
Heat a pan over medium heat. Melt butter. Add onions and sauté until soft. (About 9 minutes)
Add the milk to a mixing bowl. Remove the edges of the bread. Soak each side of each slice of bread just until they are wet. Add the bread to a separate large mixing bowl. Discard the leftover milk.
Break up the raw Italian sausage and ground beef with your hands. Add it to the bowl with the bread. Add the beaten eggs, breadcrumbs, and half the tomato sauce. Mix the ingredients with your hands using a kneading motion until just combined. Do not overmix.
At this point your onions should be finished cooking. Add them to your meat mixture and mix with a wooden spoon.
Add paprika, tarragon, garlic powder, and black pepper to meat mixture. Mix in with a wooden spoon. The mixture should be thick enough to form. If not, add 1/2 cup more of bread crumbs and combine.
Transfer mixture to a parchment paper lined baking sheet or pan. Form it into a loaf with a consistent width except for tapered ends. Use the parchment paper to help you form the loaf if you need.
Combine the rest of the tomato sauce, ketchup, Worcestershire, mustard, white vinegar, and brown sugar in a bowl. Whisk together vigorously until sugar dissolves. Taste to ensure sugar is dissolved. If it's gritty, keep whisking until it is smooth. Pour half the sauce over loaf so top is covered and sauce pools slightly on its sides. Reserve the rest of the sauce for serving.
Bake for 1 hour and 15 minutes ensuring the meatloaf's internal temperature reaches 160°F. Remove from oven and let rest for 10 minutes.
Slice into individual portions. Place portions on plates. Serve with additional sauce on the side. May serve with roasted vegetables and mashed or boiled potatoes.