In a small skillet, saute onion in oil until tender; cool. In a large bowl, dissolve yeast in warm water. Add the milk, butter, 1 egg, sugar, salt and 1 cup flour. Beat on medium speed for 2 minutes. Stir in onion and enough remaining flour to form a soft dough.
Turn onto a floured surface; knead until smooth and elastic, 6-8 minutes. Place in a greased bowl, turning once to grease top. Cover and let rise in a warm place until doubled, about 1 hour.
Punch dough down. Let stand for 10 minutes. Turn onto a lightly floured surface; divide into 32 pieces. Shape each piece into an 8-in. rope. Place 2 in. apart on greased baking sheets. Cover and let rise for 15 minutes.
Beat cold water and remaining egg; brush over breadsticks. Sprinkle half with sesame seeds and half with poppy seeds. Bake at 350° for 16-22 minutes or until golden brown. Remove to wire racks.