Mix ¾ cup applesauce, 1 packet gelatin, 1 box of Jell-O, 1 cup sugar, and ½ teaspoon lemon juice in a saucepan.
Heat just until it starts to boil around the edges, then cook for one minute, stirring frequently with a whisk.
Fill a loaf pan halfway to the top with cold water. Pour the water out, then immediately pour the gelatin mixture into the wet pan.
Wash out the saucepan, then repeat with the 2nd box of Jell-O and the remaining ingredients.
Pour into a second loaf pan, prepared with the cold water in the same way.
When the loaf pans are cool enough to touch, refrigerate for about 3 hours or until the candy is firm.
Cut around the edges of the candy, then pull out the sheet of candy and place onto a cutting board. (It might be easier to cut the candy in half first, and pull up one half at a time.)
Cut the candy into 1" squares, dipping your knife into a glass of water to keep candy from sticking.
Place each square onto an ungreased cookie sheet. Let stand for at least 8 hours at room temperature to dry.
After the candy has dried, place ⅓ cup sugar in a bowl, then roll each square in the sugar until all sides are coated.
Transfer to a serving platter, and enjoy!
Notes
Storage Tips: Store leftover red and green Christmas gumdrops in an airtight container at room temperature. They will last for about a week before they start to dry out a little. Do not freeze.Expert Tips: For easiest removal of the jelly layer, use a nonstick loaf pan. Ceramic pans and glass pans are a little harder to work with. But using a stiff or metal spatula can help you scrape the jelly off the bottom of the pan. A small offset spatula also works well. Scrape underneath the candy, and use your hands to pull the candy out of the pan.Make sure to wait the full 8 hours for the squares to dry before coating in sugar—otherwise they will be too difficult to handle, and the sugar coating will just melt into the candy. You can wait up to 24 hours before coating.