In a microwave-safe bowl, sprinkle gelatin over water; let stand 1 minute. Microwave on high for 40 seconds. Stir and let stand until gelatin is completely dissolved, 1-2 minutes.
Place lime juice, honey and gelatin mixture in a blender. Add 1 cup watermelon; cover and process until blended. Add remaining watermelon, 1 cup at a time, processing until smooth after each addition.
Transfer to a shallow dish; freeze until almost firm. In a chilled bowl, beat with an electric mixer until mixture is bright pink. Divide among 4 serving dishes; freeze, covered, until firm. Remove from freezer 15-20 minutes before serving.