Combine 1-1/2 cups flour, sugar, baking powder, undissolved yeast and salt in a large mixer bowl. Heat buttermilk, sour cream, water and butter until very warm (120° to 130°F). Gradually add to flour mixture. Beat 2 minutes at medium speed of electric mixer, scraping bowl occasionally. Add eggs and 1 cup flour. Beat 2 minutes at high speed, scraping bowl occasionally. Stir in enough remaining flour to make a soft dough. Knead on lightly floured surface until smooth and elastic, about 8 to 10 minutes. Cover; let rest 10 minutes.
Divide dough into 3 equal portions. Roll each to a 15 x 6-inch rectangle. Transfer to greased baking sheets. Sprinkle chopped maraschino cherries lengthwise over center third of each rectangle. With sharp knife, make cuts from filling to dough edges at 1/2-inch intervals along sides of filling. Alternating sides, fold strips at an angle across filling. Shape into candy canes. Cover; let rise in warm, draft-free place until doubled in size, about 45 minutes.
Bake in 375°F oven for 15 to 20 minutes or lightly browned, rotating pans as needed. Remove from sheets; cool on wire racks. Drizzle with Powdered Sugar Glaze; decorate with halved maraschino cherries, if desired.
Powdered Sugar Glaze: Combine powdered sugar, vanilla and milk in a small bowl, adding enough milk to reach drizzling consistency. Stir until smooth.