Wash rice. Bring milk, water, salt, rice and sugar to a boil over medium heat (not high heat) in a heavy bottomed pan. Lower heat and then simmer uncovered for one half hour, stirring occasionally. Add lemon peel and continue to simmer, stirring occasionally, for another half hour. Check to see if mixture is thick and coats a spoon (mechri na chilosi). If it is not thick enough continue simmering until thickened. This may take another 5 or 10 minutes. Take off heat.
Beat the egg. Add a few spoonsful of the rice mixture to the beaten egg and stir. Repeat a couple times. Then add the diluted egg mixture to the rice mixture and stir well. Put back over low heat for a couple minutes continually stirring.
Pour into serving dishes and sprinkle with cinnamon. Refrigerate.