Line the bottom and sides of 8x8x2-inch pan with parchment paper.
Combine sugar, corn syrup, honey, and salt in a heavy 3-quart saucepan. Cook, stirring, over medium heat, until mixture begins to simmer around the edges. Using a wet pastry brush, lightly brush the sugar from inside sides of saucepan. Cover; continue to cook about 3 minutes. (Meanwhile rinse spatula or spoon before using again.) Uncover; brush sides again. Attach candy thermometer to side of saucepan (do not let it touch bottom). Cook, uncovered, without stirring until mixture reaches 308 degrees F (8 minutes). Meanwhile, in small saucepan bring cream to a simmer; keep hot until needed.
As soon as the sugar mixture reaches 308 degrees F, remove from the heat. Immediately stir in butter. using long-handled spatula gradually stir hot cream into caramel. (Be careful; mixture will foam up and steam.) Return to heat. Adjust heat so mixture boils but not too rapidly. Stir to be sure it is well blended and smooth. Continue to cook 22 to 30 minutes, stirring occasionally, until temperature reaches 255 degrees F.
Remove saucepan from heat; stir in vanilla. Immediately pour caramel into prepared pan. If preparing Caramallows, let set 10 minutes and proceed as directed (see Caramallows recipe). Otherwise, let set 2 to 3 hours or until caramel is completely cool and firm.
Using an oiled knife or scissors, cut each marshmallow in half across the middle. Arrange the marshmallows very tightly together, cut (sticky) side down, on top of the caramel. There should be no space visible between the marshmallows. Let set for another 2 to 3 hours, until the caramel is completely cool and firm.
Lift pan liner to remove caramel to a cutting board. Using a long oiled knife, cut into pieces. wrap caramels in waxed paper. Store up to 1 month in an airtight container at room temperature. Makes 48 to 60 caramels.