Preheat oven to 350°F. Line 8x8x2-inch metal baking pan with foil, leaving overhang. Butter foil. Combine flour, sugar, and salt in processor; blend 5 seconds. Add coconut and butter; process until mixture resembles fine meal and begins to clump together. Gather dough into ball. Press dough evenly over bottom of prepared pan. Bake crust until golden at edges, about 25 minutes.
Meanwhile, prepare filling:
Combine 3/4 cup sugar, eggs, lemon juice, lemon peel, flour, baking powder, and salt in processor. Blend filling until smooth.
Remove crust from oven. Pour filling evenly over hot crust. Return to oven and bake until filling begins to brown at edges and is just set and springy to touch in center, about 30 minutes. Transfer pan to rack; cool lemon bars completely. Using foil as aid, transfer lemon bars to work surface. Flatten foil edges. Cut into 16 bars. Sift powdered sugar over.