In a medium bowl, using a pastry blender, cut the 1/2 cup cold butter into the first 1 cup flour until pieces are pea size. Sprinkle 1 tablespoon of the water over part of the mixture and gently toss with a fork. Push moistened dough to the side of the bowl. Repeat, using the remaining 1 to 2 tablespoons water, until dough is moistened. Form dough into a ball. Divide in half.
Lightly grease a large baking sheet. On a lightly floured surface, roll each portion of dough into a 12x3-inch rectangle. Place rectangles 3 to 4 inches apart on prepared baking sheet. Set aside.
In a medium saucepan, bring the 1 cup water and the remaining 1/2 cup butter to boiling. Remove mixture from heat and immediately stir in the almond extract. Stir in the remaining 1 cup flour. Return mixture to heat. Vigorously stir over low heat for 1 minute or until mixture forms a ball. Remove mixture from heat and let it cool for 5 minutes. Add eggs, 1 at a time, beating after each till topping is smooth and glossy.
Evenly spread topping over each pastry strip to about 1/2 inch from the edge. Bake pastry in a 350 degree F oven for 50 to 55 minutes or until topping is a deep golden brown. Cut warm pastry diagonally into 1-inch-wide strips. Carefully transfer pastry to a wire rack to cool. (Topping will fall slightly, forming the custardy top of the puff.)
In a small bowl, combine the powdered sugar and 1 tablespoon of the milk. Gradually stir in just enough of the remaining milk to make icing easy to drizzle. Drizzle icing over top of each pastry. Sprinkle with nuts. Cover and refrigerate pastries for up to 3 days. Makes about 20 pastries,