In small saucepan, combine water and potatoes. Bring to boil; cover and simmer 10 minutes or until tender. Drain potato, reserving cooking water. With fork, mash potato. Measure 1/2 cup mashed potato and set aside.
In large bowl, combine 1 1/2 cups flour, sugar, undissolved yeast, lemon peel and salt. Heat 2/3 cup potato water, milk and butter until warm (105º to 115ºF). Gradually add to dry ingredients; beat 2 minutes at medium speed of electric mixer, scraping bowl occasionally. Add eggs, reserved mashed potato and 1/2 cup flour; beat 2 minutes at high speed. With spoon, stir in enough remaining flour to make soft dough.
On lightly floured surface, knead until smooth and elastic, about 6 to 8 minutes. Place in greased bowl, turning to grease top. Cover; let rise in warm, draft-free place until doubled in size, about 45 to 60 minutes. (With Rapid Rise Yeast, cover kneaded dough and let rest on floured surface 10 minutes. Proceed with recipe.).
Punch dough down. Remove dough to lightly floured surface; divide dough in half. Roll each half to 30-inch rope; Coil in two greased 9-inch pie pans. Cover; let rise in warm, draft-free place until doubled in size, about 45 to 60 minutes.
Bake at 350ºF for 40 to 45 minutes, or until done. Remove from pans; let cool on wire rack. Sift powdered sugar over coils.