Pour 1⁄2 cup of the water and sprinkle with the gelatin into a standing mixer with whisk attachment. Set aside. Add sugar, honey, salt and remaining 1⁄2 cup of water to a medium sauce pan at high heat. Bring to a rolling boil and continue to boil for 1 minute. Remove from the heat.
Once gelatin is soaked in turn mixer to low and slowly add hot sugar mixture, pour gently down the side of the bowl, continue to mix on low. Sugar mixture is smoking hot! BE CAREFUL.
Turn mixer on high. Continue to whip for 10 to 12 minutes until the marshmallow batter has tripled in size and is very thick. Scrape down the sides of the bowl frequently to avoid the batter overflowing as it grows. Stop mixer, add vanilla, then whip to combine. Transfer mixture into a prepared baking pan using a spatula to spread evenly in pan. Work quickly, the marshmallow becomes difficult to manipulate as it sets.
Grease a sheet of wax paper with butter/coconut oil and lay it across the top of the marshmallow. Press down firmly on the plastic wrap, seal it smoothly and tightly against the mixture. Leave marshmallow to set at room temperature for at least 3 hours or overnight. The marshmallow will be too sticky and soft to cut if you try too soon.
Sprinkle work surface or cutting board with powdered sugar. Run a knife along the top edge of pan to loosen marshmallow. Invert pan and flip out onto work surface or cutting board. Scoop up handfuls of powdered sugar and rub all over the marshmallow slab. Use a large knife to cut slab into 1 × 1-inch squares. Roll each cut marshmallow square in remaining powdered sugar to coat them completely.