Steps:
- Preheat oven to 350°F. Bake coconut on rimmed baking sheet until light golden, stirring occasionally, about 12 minutes.
- Using electric mixer, beat butter, 1/2 cup powdered sugar, and both extracts in bowl to blend well. Beat in flour, orange peel, and salt. Stir in coconut. Cover and chill at least 1 hour and up to 1 day. Soften dough slightly before shaping.
- Preheat oven to 350°F. Line 2 large baking sheets with parchment paper. Using 1 level tablespoon dough for each cookie, roll dough between palms of hands into balls. Place on prepared sheets, spacing 1 inch apart. Bake until golden on bottom but pale on top, about 18 minutes. Transfer cookies to racks; cool 5 minutes. Place remaining 1 3/4 cups powdered sugar in bowl. Roll hot cookies in powdered sugar, covering completely. Cool cookies on rack. Roll cookies in powdered sugar again, coating generously. (Can be made 5 days ahead. Store airtight between sheets of waxed paper at room temperature.)
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