COMBINE water and instant potato flakes in large bowl. Stir until moistened. Add egg yolk, 1 tablespoon oil, sugar and vanilla; mix well. Gradually stir in 1 1/2 cups pancake mix.
SPRINKLE work surface with remaining 1 tablespoon pancake mix. Turn dough out onto work surface. Knead dough until well blended, about 1 minute. Shape into a 4-inch disk. Wrap in plastic wrap and chill 1 hour or overnight.
For Bacon Sugar Coating: MINCE cooked bacon in food processor until very fine. Add sugar; pulse 2 to 3 seconds just until blended.
For Optional Chocolate Glaze: PLACE syrup and chocolate in small microwave-safe bowl. Microwave on HIGH 30 to 45 seconds. Stir until mixture is smooth. Stir in powdered sugar. Gradually blend in coffee until desired consistency.
POUR oil into large heavy saucepan to 1-inch depth. Heat oil to 350ºF.
ROLL out dough to a 1/2-inch thickness on floured surface. Cut out small rounds using a 1 1/2-inch round pastry cutter or cut into 1 1/2-inch squares using a sharp knife. Working in batches, fry dough 30 to 60 seconds or until puffed and golden brown on all sides. Drain on paper towels. Roll in Bacon Sugar Coating or dip one side in Chocolate Glaze and then in Bacon Sugar Coating. Serve warm.