Preheat oven in Convection Bake to 375°F (*350°F).
Cream butter and granulated sugar in medium mixing bowl with an electric mixer until light and fluffy. Beat in lemon peel, egg, lemon extract and vanilla. Gradually add flour and beat until blended.
Using a scoop or teaspoon, drop cookies onto shiny ungreased baking sheets.
Dip bottom of 2 1/2-inch round glass into sugar. Using bottom of glass, flatten to 1/4-inch thickness. Evenly space cookie sheets in oven cavity.
Convection Bake for 9 to 12 minutes or until edges begin to brown.
Remove cookies from pan and cool on wire racks.
Sift powdered sugar over top.