Add 1 Tbsp. dry gelatin mix to frosting; stir gently until blended. Refrigerate until ready to use.
Add boiling water to remaining gelatin mix in medium bowl; stir 2 min. until completely dissolved.
Pour into 8x4-inch loaf pan sprayed with cooking spray. Refrigerate 1 hour or until firm.
Meanwhile, beat cake mix, dry pudding mix, eggs, cold water and peanut butter with mixer until blended. (Batter will be thick.) Spoon into 24 paper-lined muffin cups.
Bake 18 to 21 min. or until toothpick inserted in centers comes out clean. Cool completely.
Use paring knife to cut 1-1/4-inch wide piece from top of each cupcake, being careful to not cut through to bottom of cake; set removed centers aside.
Cut gelatin into 24 cubes; place in cupcakes. Cover with removed cupcake centers, pressing gently into cupcakes to secure. Frost cupcakes.