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Any holiday-motif cookie cutter can be used to make these. If you don't have small cookie cutters (about one inch in diameter) to cut out the centers, use the wide end of a small pastry-bag tip instead.
Makes: about 30
1 cup (2 sticks) unsalted butter, room temperature
3/4 cup sugar
1 large egg yolk
2 teaspoons grated lemon peel
1 teaspoon vanilla extract
2 1/4 cups all purpose flour
1/2 teaspoon salt
6 ounces (about) red and/or green hard candies
Additional sugar
Ribbon
Using electric mixer, beat butter and 3/4 cup sugar in large bowl until well blended. Beat in yolk, lemon peel and vanilla extract. Add flour and salt and beat until mixture begins to clump together. Divide dough into 3 equal pieces. Flatten each into disk; wrap each in plastic and refrigerate at least 2 hours. (Dough can be prepared 2 days ahead. Soften dough slightly at room temperature before rolling out.)
Finely grind red and/or green hard candies separately in processor. Transfer each color to separate small bowl; cover and set aside.
Position 1 rack in center and 1 rack in top third of oven and preheat to 375 degrees F. Line 2 large baking sheets with parchment paper. Roll out 1 dough disk on floured surface to 1/4-inch thickness. Using 2 1/2- to 2 1/4-inch-diameter cookie cutter or biscuit cutter, cut out cookies. Using small cookie cutter (about 1 inch in diameter), make cutout in center of each cookie.
Transfer cookies to prepared baking sheets. Carefully spoon ground candies into cookie cutouts, filling cutouts completely to same thickness as cookies. Sprinkle cookies lightly with additional sugar. Using straw, cut out hole in top of each cookie. Repeat with remaining dough disks, ground candies and additional sugar. Reroll dough scraps and cut out additional cookies. Place on sheets; fill cutouts with ground candies and sprinkle with sugar.
Bake cookies until firm and light golden and ground candies look translucent, about 8 minutes. Cool cookies completely on baking sheets. (Can be made ahead. Store in airtight container at room temperature up to 1 week, or freeze up to 1 month.) Thread ribbon through holes in cookies to use for hanging.
