Heat oven to 350°. Mix flour, granulated sugar and 1 tablespoon lemon peel in large bowl. Cut in butter, using pastry blender or crisscrossing 2 knives, until mixture looks like coarse crumbs. Press mixture in ungreased rectangular pan, 13x9x2 inches.
Bake 25 to 30 minutes or until edges are light golden brown.
Meanwhile, mix preserves and 2 teaspoons lemon peel in small bowl. Spread over hot crust. Bake 5 minutes longer. Cool completely, about 1 hour.
Stir powdered sugar and lemon juice in small bowl until smooth and thin enough to drizzle. Drizzle over bars. For bars, cut into 6 rows by 6 rows.