In a small bowl, combine lemon peel and sugar. Spread on a paper towel to dry. Line bottom of a 9 x 13-inch baking dish with 35 whole vanilla wafers. Set aside. In a large mixing bowl, soften cream cheese with electric mixer. Blend in powdered sugar and 1/3 cup whipped topping until smooth. Blend in lemon pudding mix. Gradually add skim milk, continuing to beat until smooth. Fold in half of the lemon zest. Spread mixture over vanilla wafers. Top with remaining vanilla wafers. Spread remaining whipped topping over vanilla wafers. Garnish with remaining lemon zest. Refrigerate 6 - 8 hours.