Cut up angel food cake into 1 in squares. Place in 9x13 baking dish. Combine egg yolks, sugar, 1-1/2 cups milk in top of a double boiler. Cook over simmering water, stirring frequently, until of thin custard consistency. Meanwhile, soften unflavored gelatin in remaining 1/2 cup cold milk. Heat over low heat to dissolve gelatin completely. Add to custard mixture. Chill approximately 1 hour until custard mixture is no longer warm. Beat egg whites until stiff but not dry. Fold in whipping cream and egg whites. Pour over angel food cake pieces. Cover and chill completely.
For the butterscotch sauce:
Place all ingredients in a saucepan and boil gently for 2 minutes, stirring occasionally. Cool.