I've actually been wanting to experiment with felting for sometime now. Mountain Pulse tells us how to make Felted Easter Eggs- so easy children can do it. I just might be able to escape with a non-botched creation this time. I bet you could use a similar technique for ornaments too when x-mas starts to roll around. (I know, I know, it's a long ways off. I just prefer to plan ahead.)
Oh, and also if you check the link you'll be able to learn how to dye eggs with tissue paper too- which is great considering the crazy expense of food coloring! I imagine you can do more with tissue designs. Don't you just love giving kids free artistic expression?