Sprinkle yeast and 2 teaspoons sugar over warm water in a small, shallow bowl. Allow to rest for 3-5 minutes, then mix thoroughly. Set bowl in a warm, draft-free place until yeast starts to bubble up and mixture almost doubles in volume, about 10 minutes.
In a large mixing bowl, mix 3 1/2 cups flour, 1/2 cup sugar, nutmeg, lemon zest, and salt.
In mixing bowl of a heavy duty electric mixer or food processor, combine yeast, milk and egg yolks. Gradually add dry ingredients, and softened butter, adding additional flour, as necessary to achieve a medium-soft ball. Knead dough, again adding flour if necessary, until smooth, shiny and elastic, about 10 minutes.
Place dough in a covered, buttered bowl in a warm, draft-free place until doubled, about 1 1/2 hours.
In the meantime, butter a large baking sheet and set aside.
When dough has risen, remove and punch down. Sprinkle with cinnamon and form into a cylinder, then twist this cylinder into a circle. Pinch the ends together to complete the circle. Once again, cover and let rise until doubled, about 45 minutes.
Pre-heat oven to 375 degrees F. Brush top and sides of cake with egg wash and bake for 25-35 minutes, or until golden brown. Cool on wire rack completely before hiding baby doll inside or icing and decorating.
Icing: Mix sugar, lemon juice and 3 tablespoons of water until mixture is smooth, adding more water as necessary to achieve a smooth, spreadable consistency. Spread icing over cake and immediately sprinkle colored sugar in alternating color rows.
Bread Machine Version: I have made the dough with great success in a Bread Machine. The only difference is, I substitute milk for the water, making the liquid total 1 cup milk. Just put the ingredients in the machine, as per manufacturer instructions, set it to the dough setting, and in a few hours you're ready to pick up the instructions from the rolling out point.
By Irishwitch from Aurora, CO
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