Puncture eyes of coconut. Drain liquid and reserve. Place coconut in 350 oven for 20 minutes. Hit warm coconut with hammer to remove shells. Remove any remaining shell with blunt knife. Pare and chunk coconut. In a blender jar, whirl 1/2 cup coconut with 1 tablespoon reserved coconut liquid about 30 seconds until well grated. Remove grated coconut; repeat with remaining coconut. Should end up with 3 cups grated coconut. Reserve 1 cup of coconut for Seven Minute Frosting.
Grease and lightly flour two 8 inch round cake pans. Cream 3/4 cup sugar, shortening, and lemon extract until light and fluffy. Combine flour, baking powder, and salt. Beat 1/3 dry ingredients into creamed mixture. Beat in 1/2 cup milk. Repeat ending with dry ingredients. Fold in 1 cup coconut. Beat egg whites to foamy stage. Gradually add remaining sugar, beating until stiff peaks form. Gently fold into batter. Pour into prepared cake pans. Bake in a 350 oven for 30 minutes until toothpick inserted in center comes out clean. Cool 5 minutes; turn onto wire rack to complete cooling. Frost one layer with Seven Minute Coconut Frosting; sprinkle top with 1/4 cup coconut. Add second layer. Frost entire cake. Sprinkle top and sides with 3/4 cup remaining coconut.
SEVEN MINUTE COCONUT FROSTING 2 egg whites 1 1/2 cups sugar 1/4 teaspoon cream of tartar 1/3 cup cold water 1/4 teaspoon lemon extract 1 cup reserved freshly grated coconut Combine egg whites, sugar, cream of tartar, cold water and lemon extract in top of double boiler; beat 1 minute. Set top of double boiler over boiling water; cook 7 minutes, beating constantly at high speed until stiff peaks form. Remove from heat. Fold in reserved grated coconut.