COMBINE butter and sugar in large bowl; beat with electric mixer until light and fluffy. Add egg, lemon extract and lemon peel; beat well. Add flour and baking powder; beat on low speed to combine. Refrigerate dough at least 1 hour.
HEAT oven to 350ºF. Coat baking sheet with no-stick cooking spray.
ROLL out half of dough on lightly floured surface to 1/4-inch thickness. Use cookie cutters to cut out 3-inch rounds for baseballs and a star cutter for star cookies. Place cookies 1-inch apart on prepared baking sheet.
BAKE 12 to 14 minutes or until light golden brown. Remove to wire rack to cool completely.
COMBINE powdered sugar and dried egg whites. Stir in just enough of the water to achieve a spreadable consistency. Divide into several smaller bowls. Add color by dipping wooden pick into food coloring and then into frosting, stirring to combine.
BRUSH frosting on each cookie using a pastry brush to coat top. Spoon remaining frosting into small decorating bag. Pipe onto cookies to create baseballs and patriotic stars.