PREPARATION:

1. Combine 2 cups flour, granulated sugar, yeast, salt, lemon peel and nutmeg in large bowl. Combine 1-3/4 cups milk and butter in 1-quart saucepan. Heat over low heat until mixture is 120° to 130°F. (Butter does not need to completely melt.) Gradually beat milk mixture into flour mixture with electric mixer at low speed. Increase speed to medium; beat 2 minutes.
2. Beat in eggs and 1 cup flour at low speed. Increase speed to medium; beat 2 minutes. Stir in enough additional flour, about 2 cups, to make soft dough. Cover with greased plastic wrap; refrigerate at least 2 hours or up to 24 hours.
3. Punch down dough. Turn out dough onto lightly floured surface. Knead dough about 1 minute or until dough is no longer sticky, adding remaining 1/2 cup flour to prevent sticking if necessary.
4. Grease 2 large baking sheets. Roll out dough to 1/2-inch thickness with lightly floured rolling pin. Cut dough with floured 2-3/4-inch doughnut cutter. Reroll scraps, reserving doughnut holes. Place doughnuts and holes 2 inches apart on prepared baking sheets. Cover with towels; let rise in warm place about 30 minutes or until doubled in bulk.
5. To prepare glaze, combine powdered sugar and cinnamon in small bowl. Stir in enough remaining milk, about 1/4 cup, to make glaze of desired consistency. Cover; set aside.
6. Preheat oven to 400°F. Place pieces of waxed paper under wire racks to keep counter clean. Bake doughnuts and holes 8 to 10 minutes or until golden brown. Remove from pan; cool on wire racks 5 minutes. Dip warm doughnuts into glaze. Place right side up on racks, allowing glaze to drip down sides. Serve warm.