To make the dressing, in a mixing bowl whisk together the sugar, dry mustard, salt, vinegar, and grated onion until well blended. Pour in the oil and then whisk until thick and emulsified.
Heat a skillet on medium, add the poppy seeds, then lightly toast while stirring occasionally for a minute. Remove from the heat and stir them into the dressing. Taste and make any adjustments if needed.
For the salad, the lettuce into pieces and place in a mixing bowl. Add the grapefruit, avocado, and red onion. Dress with ¼ cup of the dressing then lightly toss until well coated. Serve with more dressing on the side.
Any leftover dressing will keep in the refrigerator for 1 week.