Combine 1 cup breadcrumbs and milk; stir well. Set aside.
Cream butter; gradually add sugar, beating well. Add egg yolks, one at a time, beating well after each addition. Add breadcrumb mixture, lemon rind, and juice; mix well.
Beat egg whites (at room temperature) until stiff peaks form. Fold whites into yolk mixture.
Cover bottom of a greased 2- quart casserole with a thin layer of custard mixture. Layer macaroons evenly over custard; sprinkle with 1/4 cup sherry. Pour one-half of remaining custard mixture over macaroons.
Spread jelly on cake slices. Place slices over custard layer. Sprinkle remaining breadcrumbs over top. Add remaining sherry; top with remaining custard. Cover; bake at 350° for 35 minutes or until set. Serve warm.