In a large mixing bowl, combine flour, sugar, and lemon peel. Using a pastry blender, cut in butter until mixture resembles fine crumbs and starts to cling. Knead gently until dough comes together and forms a ball.
To make wedges, on an ungreased cookie sheet, pat dough into an 8-inch circle. Make a scalloped edge. Cut circle into 16 wedges. Leave wedges in circle (do not separate).
Bake in a 325 degree F oven about 25 minutes or until edges start to brown and center is set. Recut circle into wedges while warm. Cool on cookie sheet 5 minutes. Remove and cool on wire rack.
Make Lemon Icing. Drizzle over wedges. Sprinkle with coarse decorating sugar, if you like. Store cookies in an airtight container for up to 3 days or freeze in a freezer container for up to 3 months. Makes 16 shortbread cookies.
In a small mixing bowl stir together sugar and lemon juice. Stir in milk, 1 teaspoon at a time, until icing is of drizzling or piping consistency.