Place water in a large saucepan. Bring to a boil. Reduce heat; add scallops and poach, uncovered, for 6 minutes or until firm and opaque. Drain scallops, reserving 1 cup liquid.
Sprinkle scallops with salt. In a large skillet, saute mushrooms and shallots in butter until tender. Add scallops; cook 2 minutes longer. Remove from the heat and set aside.
For sauce, in a small saucepan, melt butter. Stir in flour until smooth; gradually add milk and reserved poaching liquid. Bring to a boil; cook and stir for 2 minutes or until thickened. Stir in the cheese, sherry, salt, lemon juice, pepper and lemon peel; add to skillet.
Divide scallop mixture among eight scallop shells. Combine bread crumbs and melted butter; sprinkle over tops. Place on an ungreased 15-in. x 10-in. x 1-in. baking pan. Bake at 375° for 8-12 minutes or until crumbs are golden brown. Yield: 8 servings.