Combine mustard seeds, dry mustard and water in small bowl. Cover; let stand at least 4 hours or overnight.
Combine vinegar, onion, brown sugar, garlic, salt, tarragon and cinnamon in heavy stainless steel 1-quart saucepan. Bring to a boil over high heat; reduce heat to medium. Boil, uncovered, about 7 to 10 minutes until mixture is reduced by half.
Pour vinegar mixture through fine sieve into food processor bowl. Rinse saucepan; set aside. Add mustard mixture to vinegar mixture; process about 1 minute or until mustard seeds are chopped but not puréed. Pour into same saucepan. Cook over low heat until mustard is thick, stirring constantly. Store in airtight container or decorative gift jars up to 1 year in refrigerator.
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