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Into a large bowl, measure cereal; set aside.
In a microwaveable bowl, microwave chips, butter, lemon peel, and juice uncovered on high 1 minute; stir. Microwave about 30 seconds longer or until mixture can be stirred smooth. Pour mixture over cereal, stirring until evenly coated. Pour into 2-gallon resealable food-storage plastic bag.
Add powdered sugar. Seal bag; gently shake until well coated. Spread on waxed paper or foil to cool. Store in airtight container.
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