Yields approximately 36
2 1/4 ounces active dry yeast (1 packet)
In a mixing bowl,mix the yeast and sugar into 1/2 cup of the warm water. When the mixture turns foamy (about 5 minutes), stir in the remaining 1-1/2 cups warm water with the egg, flour salt, nutmeg and vanilla. Mix until the batter is thick but smooth. Cover with plastic wrap and set in a warm spot to rise for about an hour. (don't stir again or it will deflate.) The result should be a bubbly batter.
In a deep fryer or a large heavy pot, heat four inches of oil to 375º F. making sure there are at least 2 inches between the oil surface and the top of the pot. This should take about 20 minutes.
While the oil is heating, prepare the syrup by combining the ingredients in a small bowl or a 2-cup measuring cup.
Working in batches, slide dollops of the batter (about the size of a heaping tablespoonful each) into the hot oil at a time, making sure not to crowd the pan. The dollops will puff up and float to the top. Turn the puffs occasionally with a slotted spoon until they are a deep golden brown on all sides and very crisp, about 2-4 minutes total. Remove carefully and drain on paper towels or brown paper bags.
Dust the puffs generously with cinnamon, drizzle with the honey-lemon syrup. and sprinkle with walnuts.