I've been doing this trick for the past five years, two shows nightly, six nights a week. The following is my exact handling:
-I have the fake in thumb palm position, crumpled in my hand.
-Real egg is sitting in a tiny box behind table next to a white cloth the same color as the egg.
-Show napkin, then tear into several pieces, dropping some of the pieces, leaving nothing but the fake in my hand. To the audience it will look like just another piece of napkin.
-Drop the fake into the glass and swirl around. Stop swirling the glass and allow it to register that it's an egg.
-Walk to table and reach for cloth. Grasp real egg in finger palm and cloth with the fingers of the same hand.
-Lay cloth over the arm holding the glass. The audience will simply think you reached over to pick up a cloth.
-Roll fake into hand holding the real egg with mouth of glass toward audience so that they cannot see the real egg.
-Rotate the fake to the back of the hand with the real egg at the fingertips so you can break it on the edge of the glass.
-Let the egg drip down into the glass and then drop the shell in the glass also.
-Reach over with the hand secretly holding the fake and grab the cloth.
-Use the cloth to wipe the side of the hand holding the glass or even the glass itself to give a reason for having the cloth in the first place.
-Ditch the cloth and the fake at the same time and show glass/egg all around.
Steve, your email reads as though you take the fake out of the glass and show it before you try to switch it for the real egg. If this is the case I must say that there is no reason for this.
I hope this helps.