Position a rack in the center of the oven and preheat to 350°F. Lightly grease a 13x9-inch baking pan and line it with parchment, leaving an overhang to lift the bars out later.
In a large bowl whisk together 3/4 cup sugar, flour, baking powder, salt, and 1/4 tsp cinnamon. Rub the cold butter into the dry mix with a pastry cutter or your fingertips until the mixture looks like coarse crumbs with some pea-sized pieces remaining.
Stir the beaten egg into the crumb mixture until it just begins to clump together; you should still have loose crumbs. Reserve about 1 1/4 cups of the crumb mix for the topping, then press the rest evenly into the bottom of the prepared pan to form the base. Chill the pressed crust in the refrigerator while you make the filling, about 10 minutes — this helps the crust hold together while baking.
Toss the diced peaches with 1/2 cup sugar, cornstarch, 1/4 tsp cinnamon, lemon juice and lemon zest in a bowl. Let sit 5 minutes so the sugar begins to draw out juice and the cornstarch starts to thicken the mixture.
Spread the peach filling evenly over the chilled crust. Take handfuls of the reserved crumb mixture and press lightly to form irregular clumps, then scatter these over the fruit leaving some peach patches exposed for a rustic look.
Bake in the preheated oven for 42 to 50 minutes, or until the top is golden brown and the filling is bubbling in spots. Start checking at 42 minutes; depending on your oven and pan the exact time will vary.
Remove the pan to a wire rack and let the bars cool completely — at least 1 hour. For cleaner slices chill for 30 minutes more in the refrigerator before cutting.
Whisk together powdered sugar, vanilla and milk until smooth. Drizzle over the cooled bars using a spoon or a small piping bag. Allow the glaze to set 10 to 15 minutes before slicing into 18 bars.
Lift bars from the pan using the parchment overhang and cut into squares. Store leftover bars in an airtight container in the refrigerator for up to 4 days.