To make the filling, whisk together 1/2 cup sugar and next 4 ingredients in a large bowl. Add peaches and lemon juice; toss well. Spoon filling into a lightly greased 11- x 7-inch baking dish. Bake at 425° for 15 minutes or until bubbly.
While peaches bake, combine remaining 1/2 cup sugar, 2 cups flour, baking powder, and salt. Cut in butter with a pastry blender until crumbly. Add 1/2 cup water; stir just until dry ingredients are moistened. Set aside. Combine egg and 2 tablespoons water.
Drop dough by heaping tablespoonfuls onto hot peaches (topping will spread as it bakes). Brush topping with egg wash, and sprinkle with sugar. Bake at 425° for 20 minutes or until golden.