Preheat oven to 350 degrees and spray an 8 inch square baking dish with nonstick, butter flavored spray.
In a large bowl, combine peaches, 1/4 cup of the sugar and the nutmeg. Toss well to coat. Set aside for about 30 minutes to let the peaches soak up the sugar.
In another large bowl, combine the flour, baking powder, salt and remaining sugar.
In a separate bowl, mix together the milk, liquid egg substitute, vanilla, lemon rind and butter.
Slowly blend the milk mixture into the flour mixture until the batter is smooth.
Pour the peaches into the baking dish. Evenly spread the batter over top of the peaches and bake until the batter becomes brown - about 30-35 minutes.
Remove from oven and let dessert rest for half an hour before serving. Cut into 6 equally sized pieces and serve at room temp or warm if desired.