Heat oven to 350°F.

In large bowl, beat butter, 1 cup powdered sugar and the lime peel with electric mixer on medium speed until light and fluffy.

On medium-low speed, beat in flour and 1 cup coconut 2 to 3 minutes or until blended.

Shape dough into 1-inch balls; roll in granulated sugar.

Place on ungreased cookie sheet.

With bottom of glass dipped in granulated sugar, flatten each ball until about ¼ inch thick.

Bake 10 to 12 minutes or until light golden brown.

Cool 2 minutes; remove from cookie sheet to cooling rack.

Cool completely.

In small bowl, mix 2½ cups powdered sugar, 2 tablespoons lime juice, 2 tablespoons half-and-half and the food colors until glaze is of desired consistency, stirring in remaining lime juice and half-and-half, ½ teaspoon at a time, if needed.

Place toasted coconut in shallow dish.

Dip edge of each cookie in glaze; roll in toasted coconut.

Place on cooling rack; let stand 10 to 15 minutes or until set.

Store in airtight container.