Mix the yeast, water, and sugar in a mixer bowl fitted with a dough hook. Let stand until foamy, about 5 minutes.
Add the salt, lemon zest, cinnamon, egg, milk, and 1½cups flour; mix on medium speed until combined.
Add the butter; mix until incorporated.
Add 1¾ cups flour, and mix until the dough comes together.
Turn the dough onto a lightly floured surface. Knead in the remaining ¼ cup flour by hand until the dough is smooth, about 5 minutes.
Place the dough in a lightly oiled bowl, cover loosely with plastic wrap, and let stand in a warm, draft-free spot until doubled in size, about one hour. Remove the dough from the bowl. Roll out the dough on a lightly floured surface to half-inch thickness.
Cut out rectangles with a pizza cutter.
Place on a parchment-lined baking sheet. Let rise in a warm, draft-free spot for 30 minutes.
Heat the oil in a large, sturdy pot or deep fryer until it registers 180C/350F on a deep-fry thermometer.
Fry the beignets in batches, rolling them around constantly with a slotted spoon, until golden brown all over. About 1 to 2 minutes.
Transfer the beignets with the slotted spoon to a cooling rack that's set over a baking pan and dust generously with powdered sugar.