In a medium saucepan combine the sugar and gelatin; stir in water. Cook and stir over medium heat until mixture bubbles and gelatin is dissolved. Gradually stir about half of the gelatin mixture into the slightly beaten eggs. Return the mixture to the saucepan. Cook, stirring constantly, over low heat for 2 to 3 minutes or until slightly thickened.
Transfer to a medium bowl. Stir in the shredded lemon peel and lemon juice. Chill in ice water about 20 minutes or just until the mixture thickens slightly, stirring occasionally.
Fold the whipped topping into the lemon mixture. Chill again in ice water about 15 minutes or just until mixture mounds, stirring occasionally.
Spoon into individual dessert dishes or souffle dishes. Cover and chill at least 2 hours or until set. If desired, garnish with lemon peel strips. Makes six 1/2-cup servings.