MIX dry gelatin and water in large microwavable bowl. Microwave on HIGH 2-1/2 minutes; stir until gelatin is completely dissolved.
ADD marshmallows; stir. Microwave 2 minutes or until marshmallows are partially melted. Stir until marshmallows are completely melted. Pour into 13x9-inch pan sprayed with cooking spray.
REFRIGERATE 1 hour or until set. Cut gelatin into 4-1/4x2-1/4-inch rectangles, cut small slits on short ends of each rectangle to form "fringe" for each "carpet."