Dough: In a large mixer bowl, thoroughly mix 2 cups flour, yeast, sugar and salt. In small saucepan, heat water, milk and butter until warm (120 - 130 °F; butter does not need to melt). Add to flour mixture. Blend at low speed until moistened; beat 2 minutes at medium speed, scraping bowl occasionally. Add egg and 1 cup flour. Beat 2 minutes at high speed, scraping bowl occasionally. By hand, gradually stir in enough remaining flour (about 1 cup) to make a stiff batter. Cover bowl tightly with foil or plastic wrap. Refrigerate at least 2 hours or up to 3 days.

Filling: When ready to shape tree, in mixer bowl combine cream cheese, sugar, nutmeg, salt and vanilla extract. Beat just until well blended. Stir in pineapple.

Grease 2 large cookie sheets. Divide dough in half; refrigerate one half. On lightly floured surface, roll remaining half to a 11 x 10-inch rectangle. Spread with half the filling. Starting with longer side, roll up; pinch seam to seal. Cut crosswise into eleven 1-inch slices. Arrange 10 pieces cut side down on cookie sheet in triangular shape. Center remaining piece at base of triangle. Cover lightly with plastic wrap. Repeat with remaining dough. Let rise in warm place until double in bulk, about 50 minutes. Bake at 375 °F. for 15 minutes. Cover edges with foil to prevent darkening. Bake 5 to 10 minutes longer until center is lightly browned. Cool on wire racks. (Can be prepared ahead. Wrap tightly and freeze up to 4 weeks. Thaw wrapped at room temperature. Unwrap and warm in a preheated 350 °F. oven for 10 minutes.)

Topping: Place cherries cut side down in center of each roll. Combine powdered sugar and milk; mix until smooth and drizzle over cakes. Immediately sprinkle with colored sugars.