A double dose of coconut -- coconut milk in the batter and toasted coconut garnish -- fill these petite cupcakes with tropical flavor. Be sure to shake coconut milk vigorously before using because the can's contents tend to settle.
In a medium saucepan bring coconut milk just to boiling; reduce heat. Simmer, uncovered, for 20 to 30 minutes or until milk is reduced to 1 1/3 cups; cool. Meanwhile, preheat oven to 375 degrees F. Line eighteen 2 1/2-inch muffin cups with paper bake cups; set aside. Using the tip of a small sharp knife, scrape out seeds from vanilla bean; set aside.
In a small bowl stir together flour, ground nuts, baking powder, and salt; set aside. In a large bowl beat butter with an electric mixer on medium to high speed for 30 seconds. Add sugar. Beat on medium to high speed for 1 minute, scraping side of bowl occasionally.
Add eggs, one at at time, beating well after each addition. Stir in half of the vanilla seeds; reserve other half for frosting. Alternately add flour mixture and 1 cup of the reduced coconut milk (reserve rest of coconut milk for frosting) to butter mixture, beating on low speed after each addition just until combined.
Spoon batter into prepared muffin cups, filling each about three-fourths full. Bake for 18 to 20 minutes or until tops spring back when lightly touched. Cool in muffin cups on wire racks for 5 minutes. Remove from muffin cups. Cool completely on racks.
Pipe or spread Vanilla-Coconut Frosting on tops of cupcakes. Sprinkle with toasted coconut.
Allow butter to stand at room temperature for 30 minutes. In a large mixing bowl beat butter with an electric mixer on medium to high speed for 30 seconds. Beat in the reserved reduced coconut milk from cupcakes, the reserved vanilla seeds from cupcakes, and salt. Gradually add powdered sugar, beating until fluffy.