Lightly butter and dust a 9x5 inch loaf well with powdered sugar. Set aside.
In the bowl of a stand mixer dissolve gelatin in 1/4 cup water. Set aside.
Stir remaining 1/4 cup water, granulated sugar, honey, and salt together in a medium saucepan over medium heat. Heat mixture to 240F, stirring occasionally.
Very slowly, pour sugar mixture over water-gelatin mixture. Attach a whip attachment to mixer, and beat on high speed 8-10 minutes, or until mixture is thick and creamy. The marshmallows are whipped enough when mixture forms a ribbon in bowl when pulled up with whip attachment. Add vanilla to marshmallow mixture and beat an additional 30 seconds.
Immediately spread marshmallow mixture evenly into prepared pan (do this part quickly, it will begin to set up) Cover pan with plastic wrap and allow marshmallows to set in refrigerator overnight or 6 hours.
Dust marshmallows with powdered sugar and cut into 1-inch squares, cleaning knife between cuts, and roll in additional powdered sugar to coat. Store marshmallows in an airtight container in refrigerator up to 2 weeks.