Preheat the oven to 350°F (175°C). Generously butter a 9-inch round baking dish or similar-sized oven-safe dish.
Make citrus sugar: In a small bowl, combine the zest of 1 lemon with ⅓ cup of the sugar. Use your fingers to rub the zest into the sugar until fragrant and pale yellow. Set aside.
Blend the batter: In a blender, combine the milk, eggs, remaining ⅓ cup sugar, vanilla extract, flour, and salt. Blend until smooth and well combined, about 30 seconds.
Pre-bake the base: Pour about ½ of the batter into the prepared baking dish—just enough to coat the bottom. Place in the preheated oven and bake for 10 minutes, or until slightly set.
Add the fruit: Carefully remove the dish from the oven. Evenly scatter the blueberries and thin peach slices over the partially set batter. Sprinkle the citrus sugar evenly over the fruit.
Pour and bake: Gently pour the remaining batter over the fruit and return to the oven. Bake for 50-55 minutes, or until puffed, golden, and set in the center.
Cool and finish: Let cool slightly. Dust with powdered sugar before serving, if desired. Serve warm or at room temperature.