In a heavy saucepan, combine milk, water, lemon rind, cinnamon stick and salt; cover and bring to a boil. Stir in rice; reduce heat to medium-low and cook, uncovered for 35-40 minutes, or until almost tender, stirring often and scraping sides of pan.
Add sugar and continue cooking over low hear for 5 minutes, or until rice is tender and almost all liquid is absorbed. Remove from heat.
Remove cinnamon stick and lemon rind. Pour pudding into a nice serving dish and sprinkle with ground cinnamon, or you can make a design, which my Grandmother almost always did. Serve room temperature or cover and refrigerate for up to 4 days.