In a large bowl, cream butter and sugar until light and fluffy. Beat in egg and vanilla. Combine flour and salt; gradually add to creamed mixture. Cover and refrigerate 1-2 hours or until dough is easy to handle.
Preheat oven to 350°. On a lightly floured surface, roll out dough to 1/8-in. thickness. Cut with floured 2-1/2-in. butterfly or flower cookie cutters. Place 1 in. apart on ungreased baking sheets.
Bake 8-10 minutes or until edges are lightly browned. Remove to wire racks to cool.
For glaze, in a small bowl, combine confectioners' sugar and meringue powder; stir in water until smooth. Divide among small bowls; tint pastel colors. Spread over cookies; let stand until set.
Meringue powder is available from Wilton Industries. Call 800-794-5866 or visit wilton.com.