What ever you decide for the blocks, think quilt as you go to deal with the limits of the smaller machine size... I think this would work great with framing up the individual blocks the kids make
Enjoy - I did a quilt a few years back with 24 kids in the special ed classes ages 6-12. Each cut out shapes in contact paper, arranged & stuck them on a batik block I precut for them. Then they painted, let dry & removed the contact paper. I washed all the blocks and put them together. It was auctioned off for a couple hundred dollars at the school
and the kids were so proud. The owner of a local toy store bought it & has it on the wall at his shop.