Add the cold water to a mixing bowl. Sprinkle the gelatin packets over the top and stir slightly so that the added gelatin gets wet. Let this sit for 3-5 minutes to turn into a soft jelly texture. (if you notice any white chunks appearing, whisk those lightly so that they disappear)
Add the boiling water to the bowl and whisk lightly to dissolve the jelly.
Add the sweetened condensed milk to the bowl (there will be pieces of crystallized coconut that show up - it's okay!), and mix with a whisk.
Add the rum and coconut extract and stir. (You'll likely still feel those sugar pieces in the mixture. You can use a spoon to help them back when pouring the jello mixture into the glass, or strain them out.)
Strain out those sugar pieces. (while they are fine to eat, they're just a texture that most people are thrown off by and easier to remove)
Fill each shot glass using a measuring cup, but be sure to leave a bit at the top.
Put the shots in the fridge for 2 hours or until they are set.
Add the whipped cream on top or use a frosting tip. Then sprinkle with the shredded coconut and add a piece of the coconut shell if desired.