Steps:
- Cut off the domed top and the side and bottom crust of the panettone leaving about a bit over a pound's worth. Trim the pannettone further so that it fits very snugly into the dish you have chosen and comes just to the top edge of the dish. Slice it crosswise into 1/2-inch thick slices. Leave them exposed overnight to the air or put them on a cookie sheet in a very low oven for an hour or so, until the panettone has dried out a bit.
- Preheat the oven to 350 degrees. Combine the water with 3/4 cup of the sugar in a heavy, 2-quart saucepan. Stir over high heat until the sugar is dissolved and the liquid clears. Cook undisturbed until the edges start to brown; then swirl the pan continuously and vigorously until all the sugar has caramelized to a golden amber color. Immediately pour the caramel into the souffle dish. As the caramel cools and hardens, turn the dish in all directions so that the inside is evenly coated. The caramel will spread further in baking.
- In a saucepan, bring the milk and lemon zest to a simmer, remove from the heat and allow to cool for a few minutes. In a large bowl, mix well the remaining 3/4 cup sugar with the eggs. Gradually stir in the hot milk.
- Trim one slice of panettone so that it fits into the bottom of the souffle dish. Spoon 2 or 3 tablespoons of melted butter over it and then enough of the custard mixture to cover the panettone. Let it absorb the custard, adding more if necessary to cover. Repeat with additional slices of panettone, melted butter, and custard until the dish is filled to the very top. With each slice (and especially the last), use your palm to hold down the panettone until it completely submerged and saturated with custard. Do not compress the panettone, or the budino will be too dense. Drizzle any remaining butter over the top.
- Place the souffle dish into a larger pan filled with enough very hot tap water to come three-quarters of the way up the side of the dish. Bake for about an hour and a half. The top should be puffed and brown, the pudding should begin to pull away from the sides of the dish, and the internal temperature should rise to between 160 and 170 degrees. Allow the pudding to cool for at least 15 minutes. Just before serving, run a thin knife around the inside of the dish and unmold the pudding by inverting the souffle dish onto a large plate. Serve warm, cut into wedges.
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