Mix flour, sugar, baking powder and cinnamon in large bowl; set aside. Beat egg, milk, applesauce and oil in small bowl with wire whisk until well blended. Stir in cereal; let stand 5 min.
Add to flour mixture; stir just until moistened. (Batter will be lumpy.) Stir in apples and walnuts.
Spoon batter evenly into 12 greased or paper-lined medium muffin cups.
Bake 20 min. or until toothpick inserted in centers comes out clean. Cool 5 min.