Preheat oven to 325°.
In a large bowl, beat egg whites at high speed of a mixer until foamy. Gradually add 1/4 cup sugar, 1 tablespoon at a time, beating until stiff peaks form. Set aside.
Combine flour and remaining sugar in a medium bowl; add milk, egg yolks, and lemon rind, stirring with a whisk until smooth. Stir in lemon juice, butter, and vanilla. (Batter will be very thin.) Add about one-fourth batter to beaten egg whites, stirring well. Stir remaining batter into egg white mixture.
Pour mixture into an 8-inch square baking dish coated with cooking spray. Place dish in a 13- x 9-inch baking pan; add hot water to pan to a depth of 1 inch. Bake at 325° for 45 minutes or until lightly browned and sides begin to pull away from the pan. Let stand in pan 5 minutes. Remove dish from pan; let cool 15 minutes. Sprinkle top with powdered sugar; serve warm.