Cut onions into ¼ inch slices and separate into rings.Place onions in a bowl.Add buttermilk and refrigerate for 15 minutes.Heat the oil to 365-370.In a small bowl, stir together the flour, baking powder, salt and cayenne.Dip the onion slices into the flour mixture until they are all coated; set aside. Pour the buttermilk from the bowl into the flour mixture add the water, the egg and stir until blended using a fork.Dip the floured rings into the batter to coat, then place on a wire rack to drain.Spread the bread crumbs out on a plate or shallow dish. Dip the onion rings into the crumbs opn both sides to coat.Deep fry a few at a time for 2 to 3 minutes, or until golden brown (turning midway).Place on paper towels to drain.Salt to taste.