Preheat oven to 375 degrees. Wrap the tofu in paper towels to absorb excess moisture. Set a cast iron skill over the tofu to squeeze out the moisture. Leave for at least 5 minutes.
Unwrap tofu and discard the paper towels. Cut the tofu into small 1/2-3/4 cubes. Sprinkle the tofu cubes generously with salt.
Heat a large cast iron skillet over medium heat. Once hot, add 1 tablespoon coconut oil and the tofu cubes. Sauté for 5 minutes, flipping to cook on all sides, until the tofu has a light golden crust on all sides.
Transfer the cubes to a baking sheet and place them in the oven for 12-15 minutes to crisp. Set the large cast iron skillet back on the stovetop to reuse.
Meanwhile, chop the onions and peppers into rough 1-inch pieces. Mince the garlic. Then crush the kaffir lime leaves to help release their oils.
Heat the skillet over medium-high heat. Add the remaining coconut oil. Once the oil melts, add the onions. Sauté for 1 minute, then add the peppers and garlic. Sauté another 2-3 minutes.
Move the veggies to the sides of the skillet and add the panang red curry paste and peanut butter to the center of the pan. Sauté the curry for 2-3 minutes to intensify the flavor, moving around the pan. Then add the kaffir lime leaves, coconut milk, and fish sauce. Stir to blend.
Lower the heat and simmer for 10-12 minutes, until the curry thickens. Stir occasionally. Remove from heat and stir in the basil leaves and crispy tofu. Serve with rice, quinoa, or noodles. *You can also ladle the curry into bowls and top with crispy tofu instead of stirring it into the curry.
Shopping Tips: There are some ingredients that may need to be purchased at an Asian food market, but this recipe is worth the trip! Most likely: panang red curry paste, kaffir lime leaves, thick canned coconut milk, fish sauce, and Thai basil.Extra Kaffir Lime Leaves? Kaffir lime leaves can be kept in the freezer. They turn dark, but retain their flavor. Kaffir lime leaves stay a little tough, even after cooking. You can eat them, eat around them, or take them out after cooking.Strict Vegetarian? You can substitute soy sauce for the fish sauce, but fish sauce tastes more authentic.Too Spicy? If you are worried about the spiciness of the curry paste, start with half a can. You can add more near the end if you like.