Preheat an oven to 400 degrees F (200 degrees C). Toss sliced shallot with olive oil in a heavy pot or dutch oven until well coated. Arrange sausages atop shallot mixture. Bake in the preheated oven until the sausage is no longer pink in the center, turning sausages occasionally to brown evenly, 25 to 30 minutes. An instant-read thermometer inserted into the center should read 160 degrees F (70 degrees C). Transfer sausages to a platter; cover and set aside. Melt butter in the pot used to cook the sausage over medium heat. Stir in milk and bring to a low simmer. Gradually stir in about 3/4 of the Italian cheese blend until melted; reserve the remaining cheese for topping. Remove cheese sauce from heat, stirring occasionally to keep sauce smooth. Bring a large pot of lightly salted water to a rolling boil. Cook the gnocchi at a boil until it floats to the top, about 3 minutes; drain. Serve sausage and gnocchi topped with cheese sauce and sprinkle with reserved cheese and basil.