Beat egg yolks at medium speed with an electric mixer until thick and pale; add lemon rind and next 3 ingredients, beating well.
Combine 1 cup sugar and next 3 ingredients; add to lemon mixture, beating until smooth.
Beat egg whites until soft peaks form; add remaining 1/2 cup sugar, and beat until blended. Fold into lemon mixture. Pour into a greased 2-quart baking dish. Place baking dish in a large shallow pan. Add hot water to pan to a depth of 1 inch.
Bake at 350° for 45 minutes or just until center is set. Remove baking dish from water bath; cool completely on a wire rack. Cover and chill at least 1 hour. Top with whipped cream, and garnish, if desired.