In a large mixing bowl, cream together the butter and powdered sugar on medium-high speed until smooth, 1-2 minutes. Beat in the egg, vanilla extract, seeds scraped from the vanilla bean, and lemon zest until blended. Mix in the flour and salt on low speed just until incorporated. Form the dough into 2 balls, and flatten into disks. Wrap each disk tightly with plastic wrap. Refrigerate until chilled and firm, at least 1-2 hours.
When you are ready to bake the cookies, preheat the oven to 375 degrees F. Line baking sheets with parchment paper or a silicone baking mat. Remove one dough disk from the refrigerator and roll it out on a well floured work surface t ¼-inch thickness. Cut with cookie cutters as desired and transfer to the prepared baking sheets. Bake 8-10 minutes, rotating the sheets halfway through baking, until fully cooked but not at all browned. Allow to cool on the baking sheet 5 minutes, then transfer to a wire rack to cool completely. Re-roll and cut remaining dough. Repeat with the second disk of dough.
For the Royal Icing:
In medium bowl, stir together powdered sugar and meringue powder. Stir in 5 teaspoons lemon juice and enough of the 4 to 5 tablespoons water to make a thin icing. Transfer 1/2 cup of the icing into small bowl; set aside. Using a flexible pastry brush, paint cookies to the edges with icing. Place on wire rack to dry completely, about 30 minutes.
Beat reserved icing with electric mixer on high speed 5 to 7 minutes or until peaks form. Place in small resealable food-storage plastic bag; cut a very small hole in the bottom of the bag with the plain white icing. Squeeze icing onto glazed cookies. Before icing dries, sprinkle with decorations, and tap off excess. Dry thoroughly on cooling rack.