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Allow 1 1/4 cups butter and eggs to stand at room temperature for 30 minutes. Meanwhile, grease and flour a 10-inch tube pan; set aside. In a medium bowl, stir together flour, baking powder, baking soda and salt. In a small bowl, combine milk, 1 tablespoon orange zest and 2 tablespoons orange juice. Set bowls aside.
Preheat oven to 350°F. In a large mixing bowl, beat the room-temperature butter with an electric mixer on medium to high speed for 30 seconds. Add granulated sugar, beating until combined. Add eggs, one at a time, beating well after each addition. Stir in vanilla. Alternately add flour mixture and milk mixture to butter mixture, beating on low speed after each addition just until combined.
Pour batter into the prepared pan, spreading evenly. Bake for about 45 minutes or until a wooden toothpick inserted near the center comes out clean. Cool in the pan on a wire rack for 10 minutes. Remove cake from pan and place on wire rack set over wax paper. Using a long wooden skewer, poke several holes all over the cake.
In a small saucepan, stir together confectioners’ sugar, the remaining 1/2 cup orange juice, 2 tablespoons melted butter, rum and cornstarch. Cook and stir over medium heat until thickened and bubbly. Cook and stir for 2 minutes more. Brush 1/4 cup of the sauce over the warm cake. Cool cake completely. Cover the remaining sauce; set aside.
Before serving, in a chilled medium mixing bowl, beat whipping cream on medium speed until soft peaks form (tips curl). Fold in the remaining 2 teaspoons orange zest.
Spoon some of the remaining sauce over cake. Top with orange slices and the remaining sauce. Serve the cake with the whipped cream.