Beat butter at medium speed with an electric mixer until creamy; gradually add powdered sugar, beating well. Stir in orange rind and extract. Gradually add flour, beating well. Cover and chill 1 hour.
Divide dough in half. Cover and chill 1 portion. Divide remaining portion into 24 pieces; shape each piece into a 2 1/2- x 1/2-inch log on a lightly floured surface. Repeat procedure with reserved portion. Place cookies on baking sheets, about 2 inches apart.
Bake at 350° for 12 minutes. Cool on baking sheets 3 minutes; remove to wire racks to cool completely.
Dip tips of cookies in melted chocolate, and if desired, chopped nuts or coconut. Place on wire racks; let stand until firm.