STIR 2 cups flour, sugar, yeast, lemon peel, cinnamon and salt in large bowl. Microwave 3/4 cup milk, water and shortening in microwave-safe bowl on HIGH 1 to 1 1/2 minutes or until very warm (120° to 130°F). (Shortening will not melt completely.) Gradually beat into flour mixture, using electric mixer on low speed. Add 2 eggs and vanilla. Beat an additional 2 minutes. Stir in just enough remaining flour to make a soft dough. Knead on lightly floured surface until smooth and elastic, about 6 to 8 minutes. Knead in nuts or raisins, if desired. Loosely cover with plastic wrap coated with cooking spray. Let rest 10 minutes.
COAT baking sheet with cooking spray. Divide dough in half. Roll each piece into a 30-inch rope on a lightly floured surface. Loosely twist the ropes together; transfer dough to prepared baking sheet, pinching ends together to create a circular ring. Coat the outside of a custard cup with cooking spray. Invert and place in center of ring to maintain circular hole in center during baking. Gently separate dough ropes in 6 areas to create spaces for dyed eggs. Arrange dyed eggs on dough and gently press down. Coat ring lightly with cooking spray. Loosely cover with plastic wrap. Let rise in warm place until doubled in size, about 45 minutes.
HEAT oven to 350°F. Whisk remaining egg and 1 tablespoon milk until frothy. Brush bread dough with egg mixture. Bake 30 to 35 minutes or until golden brown. Remove from baking sheet and cool until slightly warm on wire rack. Lift bread to remove custard cup.
To make optional glaze: COMBINE frosting and 2 teaspoons lemon juice or water in small bowl until smooth, adding additional juice or water to reach desired consistency. Drizzle over bread. Best served same day.
TIP: Do not consume hard-cooked eggs that have been left unrefrigerated for more than 2 hours.