Move oven rack to lowest position (remove other racks). Heat oven to 350°F. In extra-large glass or metal bowl, beat cake mix, water and lemon peel with electric mixer on low speed 30 seconds; beat on medium speed 1 minute.
Divide batter evenly among 3 bowls. Gently stir 6 to 8 drops of one food color into each of the batters. Pour red batter into ungreased 10-inch angel food (tube) cake pan. (Do not use fluted tube cake pan or 9-inch angel food pan or batter will overflow.) Spoon yellow batter over red batter. Spoon green batter over top.
Bake 37 to 47 minutes or until top is dark golden brown and cracks feel very dry and not sticky. Do not underbake. Immediately turn pan upside down onto glass bottle until cake is completely cool, about 2 hours. Run knife around edges of cake; remove from pan to serving plate.
Spoon 1/2 cup of the frosting into microwavable bowl. Microwave uncovered on High about 15 seconds or until frosting can be stirred smooth and is thin enough to drizzle. (Or spoon frosting into 1-quart saucepan and heat over low heat, stirring constantly, until thin enough to drizzle.) Drizzle over cake.
Place remaining frosting in decorating bag with writing tip. Pipe a ribbon and bow on each candy square to look like a wrapped package. Arrange packages on top of cake. Store loosely covered at room temperature.