Preheat oven to 375°.
To prepare cake, coat a 10-inch tube pan with cooking spray; dust with 1 tablespoon flour.
Beat eggs in a large bowl at medium speed of a mixer until foamy; gradually add 1 3/4 cups sugar, beating well. Lightly spoon 3 cups flour into dry measuring cups; level with a knife. Combine 3 cups flour, baking powder, and next 4 ingredients (baking powder through nutmeg), stirring well with a whisk. Combine rind, juice, oil, and vanilla. Add flour mixture to egg mixture alternately with juice mixture, beginning and ending with flour mixture. Combine apple, 2 teaspoons sugar, and 1/4 teaspoon cinnamon.
Pour half of batter into prepared pan. Arrange half of apple mixture over batter, overlapping slightly. Repeat procedure with remaining batter and apple mixture. Bake at 375° for 1 hour or until a wooden pick inserted in center comes out clean. Cool in pan on a wire rack 20 minutes. Carefully remove cake from pan.
To prepare glaze, combine 1/4 cup sugar, buttermilk, and baking soda in a small saucepan. Cook over medium heat 2 minutes or until foamy, stirring constantly. Drizzle glaze over warm cake. Cool completely on rack.