In a small saucepan, heat milk to 175 degrees F; stir in 1 1/4 cups sugar until dissolved. Whisk a small amount into the egg yolks. Return all to the pan, whisking constantly. Cook and stir over low heat until mixture reaches at least 160 degrees F and coats the back of a metal spoon. Remove from the heat. Cool quickly by placing pan in a bowl of ice water; stir for 2 minutes. Transfer to a large bowl.
In a blender, combine the cream, vanilla and cream cheese; cover and process until smooth. Add to cooled milk mixture. Stir in peach nectar and lemon juice. Refrigerate for several hours or overnight. Fill cylinder of ice cream freezer 2/3 full; freeze according to manufacturer's directions. Place peaches in a bowl; sprinkle with remaining sugar. Set aside, stirring several times. Drain and discard juice from peaches. Add some of the peaches to each batch of ice cream during last 5 minutes of freezing.
Refrigerate remaining mixture and peaches until ready to freeze. Transfer ice cream to a freezer container; freeze for 2-4 hours before serving. May be frozen up to 2 months.
By Robin from Washington, IA
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