Smoothly stir 1/2 cup cold water into 1 cup dry mustard; let stand for at least 10 minutes.
Meanwhile, in a 2-3 quart non corrosive pan, combine dry white wine and white wine vinegar, onion or shallots, garlic, bay leaves, allspice, salt, sugar and tarragon. Bring to a boil and cook uncovered until reduced by half (or slightly more for a hotter mustard) 15 to 20 minutes.
Pour mixture through a wire strainer into mustard paste pressing juices out. Blend and cook, stirring occasionally in the top of a double boiler over simmering water until as thick as very heavy cream (10-15 minutes; mixture thickens slightly more as it cools). Let cool. Pack into small covered jars or crocks. Refrigerate for up to 2 years.