http://hungryrabbitnyc.com/2012/02/nutcrackle/
I completely left out the hazelnuts (both in the dough and for rolling) when I made them, since not everyone likes nuts in cookies.
I'd recommend leaving out the milk. I did one batch with milk, and one without, and I was much happier with the consistency of the dough without milk. I ended up having to add a little more flour to the dough with milk because it was too sticky to form into balls. Also, the bottoms on these burn pretty quickly because of the powdered sugar.
Lastly, one small jar of Nutella = 1 1/4 cup, just enough for one batch of cookies.
Enjoy!!