Great idea .... and might inspire some into participating that would not get around to it otherwise.
However, just as you said, some of you like cutting, some like sewing, etc.
............ and some will be turned off with being given a kit, with no freedom for their own twists.
Of course, they do not have to participate!!
.... though we all know, some will whine and grumble, and find all sorts of fault about the kits.
Eg. not cut precisely, # pieces counted wrong, missing parts, don't like the pattern, fabric does not coordinate ..... etc. So be prepared for the Negative Nellies, and don't let them ruin your efforts.
Other ideas, than sewing the 5" squares together, that you mentioned .....
There are a lot of patterns made with 2-1/2" strips, that are easy to make, yet create beautiful quilts.
The old standby, Warm Wishes would work well for kitting.