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Remove and discard pulp from preserved lemon. Rinse peel to remove excess salt. Finely chop peel (about 2 tablespoons). Set aside. Place rice, water and cinnamon stick in medium saucepan. Bring to boil on medium heat. Reduce heat to low; cover and simmer 15 minutes or until water is absorbed
Meanwhile, bring milk and sugar to simmer in large saucepan on medium heat. Stir in cooked rice with cinnamon stick and bay leaves. Cook 45 minutes or until mixture is thick and creamy, stirring occasionally. Remove cinnamon stick and bay leaves. Stir in preserved lemon. Pour rice pudding into large bowl. (Pudding will thicken as it cools.) Place plastic wrap directly on surface of rice pudding. Cool slightly
Refrigerate 3 hours or overnight until well chilled.