PREPARATION:

1. Combine water, butter, 1 teaspoon sugar, salt and nutmeg in 2-quart saucepan. Heat over medium-high heat until butter is melted, stirring occasionally. Increase heat to high. Bring to a full rolling boil.
2. Add flour all at once to saucepan; remove from heat. Beat with wooden spoon until mixture forms smooth, thick paste. Cook and stir over medium-high heat 1 to 2 minutes until mixture pulls away from side of pan and forms a ball and a film forms on bottom of pan.
3. Add eggs, 1 at a time, beating vigorously after each addition until dough is smooth and shiny. Stir in vanilla. Let dough stand at room temperature 15 minutes.
4. Heat 1 inch oil in deep, heavy, large skillet over medium-high heat to 375°F; adjust heat to maintain temperature. Line baking sheet with paper towels.
5. Spoon dough into pastry bag or cookie press fitted with large star tip (about 1/2 inch).
6. Carefully press dough directly into hot oil in 6-inch-long strips, cutting strips with scissors to detach. Fry strips, 3 or 4 at a time, 5 to 7 minutes until brown, turning once. Gently remove with tongs or slotted spoon; drain well on paper towels. Repeat until all dough has been fried.
7. Roll warm strips in remaining 1/3 cup sugar to coat lightly.