Line a 9x9x2-inch baking pan with foil, extending foil over edges of pan. Butter foil; set aside.
In a heavy large saucepan stir baking pieces and sweetened condensed milk over low heat just until pieces are melted and mixture is smooth. Remove from heat. Stir in lime peel, lime juice, and food coloring if used. Stir in macadamia nuts.
Spread mixture evenly into the prepared pan. If desired, sprinkle a few additional coarsely chopped macadamia nuts over the top. Cover and chill for 2 hours or until firm.
Lift fudge from pan using edges of foil. Peel off foil. Use a knife to cut into pieces. Store in an airtight container at room temperature for up to 1 week or in the freezer for up to 2 months. Makes 2-1/2 pounds fudge.