In a food processor, combine sugar and lemon peel, cover and process until blended. In a bowl cream butter and 2/3 cup lemon-sugar until light and fluffy. Beat in the egg, lemon juice, and vanilla. Combine the flour, baking powder and salt, gradually add to creamed mixture and mix well.
Using a cookie press fitted with a 1 1/2 in bar disk, form dough into long strips on ungreased baking sheets. Cut each strip into squares (no need to separate the pieces). Bake 350 degrees for 8-10 minutes or until set (do not brown). Remove to wire racks to cool.
In a microwave melt chocolate, stir until smooth. Dip cookies diagonally in chocolate with remaining lemon sugar. Let stand until set.
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