Pour cereal into large bowl. Put half of the powdered sugar in a large paper bag. (Grocery store size) In 1qt microwave safe bowl, combine chocolate chips, peanut butter and butter. Microwave on high for 1 to 1 1/2 minutes, or until smooth, stirring halfway through. Stir in vanilla. Combine chocolate mixture and cereal and stir until all pieces are evenly coated. Pour coated cereal into paper bag, and add remaining powdered sugar. Fold top of bag over so bag is completely closed, and shake until the powdered sugar coats all of the cereal. Spread on waxed paper to cool. Store in air tight container.