In a medium saucepan combine the 3 cups water, 1 cup sugar, and, if using, dried thyme. Bring just to boiling to dissolve sugar; remove from heat. Stir in lemon peel. Cool thoroughly. Cover and chill.
In a 2-quart square baking dish combine the chilled syrup mixture, lemon juice, and if using, snipped fresh lemon thyme. Add yellow food coloring, if desired. Cover and freeze about 3 to 4 hours or until almost firm.
Break the frozen mixture into small chunks. Transfer chunks to a chilled mixed bowl. Beat with an electric mixer on medium speed until mixture is fluffy but not melted. Return quickly to the chilled dish. Cover and freeze until firm. Store, covered, in refrigerator up to 1 week.
In a medium saucepan stir together 1/2 to 2/3 cup sugar and 1/4 cup water. Bring to boiling, stirring to dissolve sugar. Stir in rhubarb. Return to boiling; reduce heat. Simmer, covered, about 5 minutes or until rhubarb is tender. Stir in strawberries and vanilla. Cool to room temperature. If not serving immediately, store, covered, in refrigerator up to 24 hours.
To serve, if frozen mixture is very firm, let stand at room temperature for 5 minutes. Scrape across top of the ice with a tablespoon and form ice into 2-inch balls. Place a ball of the ice on top of a serving of fruit. Garnish with lemon thyme sprigs, if desired. Makes 9 servings.