For red layer, in a small saucepan, combine water and sugar . Slowly stir in gelatin. Cook and stir over low heat until sugar and gelatin are dissolved. Transfer to a bowl; stir in schnapps and food coloring.
For white layer, in a small saucepan combine water and gelatin. Cook and stir over low heat until gelatin is dissolved. Transfer to a bowl; stir in vodka and sweetened condensed milk.
Place 6 tall shot glasses on an angle in a muffin pan. Using a 1/2-teaspoon measuring spoon, spoon 1-1/2 teaspoons of red mixture into each shot glass. Chill for 15 minutes or until set. Repeat with white mixture; chill again. Repeat layers 2 more times. After the last layer is set, stand glasses upright and add the remaining red mixture. (You may have extra, depending on the size of your glasses.) Chill overnight.
To serve, top with whipped cream and crushed peppermint.