Grease a 10x6x2 inch (1 1/2 qt.) glass baking dish.
Combine flour, baking powder, soda, salt, cinnamon and nutmeg. Set aside. In a large mixing bowl, beat sugar, oil and eggs until well combined. Stir in cereal, orange peel and vanilla. Add flour mixture, zucchini and nuts. Mix well. Pour into baking dish.
Bake at 325ºF for 35 minutes or until wooden pick inserted in center comes out clean. Let cool completely and spread with frosting.
In a small bowl, beat cream cheese, margarine and orange peel until light and fluffy. Gradually add sugar, beating until spreading consistency. Add milk if needed.