1. Sprinkle gelatin over 1/3 cup of the cold water. Let stand 10 minutes until softened; set aside.
2. Bring granulated sugar and remaining 1/3 cup water to boil in small covered saucepan. Uncover; boil 5 minutes. Pour into large bowl of standing mixer. Add corn syrup and gelatin; stir until dissolved. Beat at medium speed to stiff peaks, 10 to 20 minutes. Beat in vanilla.
3. Dot corners of a jelly-roll pan with marshmallow; line with waxed paper. Spread remaining marshmallow into a 3/4-inch-thick rectangle. Sprinkle lightly with confectioners' sugar; let stand until firm.
4. Spread colored sugar on two separate plates. Cut out shapes from marshmallow with 2-1/2-inch cookie cutter. Remove cutouts from pan with metal spatula; coat in colored sugar. Transfer to waxed paper. Rinse cookie cutter with water. Repeat process.Make Decorative Icing::
5. Combine all icing ingredients in large bowl. (If using egg whites, substitute 1/2 teaspoon cream of tartar for the meringue powder and omit the cold water.) Beat at medium speed of electric mixer until smooth. Increase speed to high and beat 5 minutes until thick (adding up to 1 tablespoon more cold water for piping consistency, if necessary). Store in tightly covered containers up to 3 days. Makes 2-3/4 cups
6. Decorate marshmallows with Decorative Icing as desired. Makes 24 marshmallows.