Preheat oven to 350 degrees F.
Soften the butter. In a mixing bowl, cream the sugar and butter and add the egg, lemon zest and vanilla. Beat until blended. Whisk together the flour and salt and gradually add them to the creamed mixture, on low speed. Add some water, a few drops at a time, until the dough starts to come away from the side of the bowl.
Roll out dough to 1/8-inch thickness on a lightly floured surface. Cut out chile pepper shapes, using a cookie cutter or freehand. Transfer shapes to greased or nonstick cookie sheets.
Using a few drops of food coloring at a time, color the egg yolk in each cup, as desired. Using a small, clean paint brush, paint the chile pepper red and its stem green.
Bake 8 to 12 minutes or until the cookies begin to brown around the edges. Dust with red or green sprinkles if desired.
c.1996, M.S. Milliken & S. Feniger, all rights reserved