Heat oven to 350°F. Divide dough in half. Knead 1/3 cup of flour into each half of dough. Shape each half into a disk, and place each between 2 sheets of wax paper. Roll disk out to a scant 1/4-inch thickness. Refrigerate 15 minutes.
Sort hard candies by colors. Place in separate plastic bags and crush.
Using a house-shaped cookie cutter, cut out as many houses from the dough as possible, rerolling scraps to make more. Carefully transfer cookies to a baking sheet lined with foil. Cut out bat, moon, and ghost shapes from houses using small cookie cutters; cut out doors with a small knife; and use a drinking straw to punch out a hole in the roof's peak, for hanging.
Bake cookies for 14 minutes. Remove from oven, and fill cutouts with crushed candies. Return to oven and bake 2 to 3 minutes longer, or until candies melt. Let cool completely on baking sheet.
Transfer 2/3 cup royal icing to a small bowl and tint purple. Place purple icing in a resealable plastic bag, and snip off tiny corner. Divide remaining royal icing between 2 bowls, and tint 1 green and 1 orange. Add several drops of water to icing in bowls to make it the consistency of heavy cream. Using the tip of your finger, thickly spread green icing over half the cookies and orange over the rest. While icing is still wet, decorate cookies with sprinkles. Pipe edges of cutouts with purple icing. Let dry completely. Use black string or ribbons to hang cookies.
In a large bowl, with mixer on low, beat together confectioners' sugar, powdered egg whites, and water until well combined. Increase speed to high, and continue beating until stiff peaks form.