Heat oven to 350°F. Beat butter in large bowl until light and fluffy. Gradually add 2 1/2 cups powdered sugar, beating until well combined. At medium speed, add eggs 1 at a time, beating well after each addition. Beat in lemon peel and 3 tablespoons lemon juice. Lightly spoon flour into measuring cup; level off. At low speed, gradually beat in flour and baking powder; blend well.
In medium bowl, combine 3 cups batter with poppy seed filling; blend well. Spread half of plain batter in bottom of ungreased 10-inch tube pan. Alternately add spoonfuls of poppy seed batter and remaining plain batter.
Bake at 350°F. for 1 hour 15 minutes to 1 hour 25 minutes or until toothpick inserted near center comes out clean. Cool 15 minutes; remove from pan. Cool 1 hour or until completely cooled.
In small bowl, combine glaze ingredients, adding enough lemon juice for desired drizzling consistency; blend until smooth. Drizzle over cake.