1Line 13x9-inch pan with foil, letting foil hang over 2 opposite sides of pan; spray bottom and sides of foil with cooking spray. Reserve 16 marshmallows. In 2 1/2-quart nonstick saucepan, heat remaining marshmallows, the butter, peanut butter and baking chips over medium-low heat, stirring frequently, until butter and marshmallows are melted and mixture is smooth.
2Place cereal in large bowl; pour marshmallow mixture over cereal. Spray wooden spoon or rubber spatula with cooking spray; use to stir marshmallow mixture into cereal. Spread and pat cereal mixture in pan, using sprayed utensil. (Or spray hands and pat mixture into pan; mixture will be quite sticky until set.) Let stand 10 minutes.
3Remove cereal mixture from pan by lifting with foil; peel back foil. Using large sharp knife, cut mixture in half lengthwise into 2 rectangles. To mark 1 rectangle for cutting, place toothpick at each end of one long side; add 3 toothpicks to same side, about every 3 inches, dividing into fourths. On other long side, place toothpick 1 1/2 inches from each end; add 3 toothpicks to same side, about every 3 inches, dividing into thirds. Cut diagonally across rectangle from toothpick to toothpick, forming triangles. Press together 2 end pieces to form eighth triangle. Repeat with remaining rectangle.
4For each cookie, spread frosting from top point to cover top 1/3 of triangle. Place 1 marshmallow at point. Sprinkle red sugar over frosting for hat. Spread frosting over lower 1/3 of cookie for beard; add gumdrop piece at top center of beard for mouth. Add 3 dots of icing to face area for attaching blue bits for eyes and red bit for nose. Let stand 10 minutes until frosting is set.