I've used this technique with school children as well. I had them draw an image (such as a house). Then I traced each picture with a permanent black fabric pen (after ironing on a piece of freezer paper to the back*). Then they colored their picture in with Crayolas and I heat set with paper towels as you described. One year we made little pillows from their designs. It was a fun and satisfying project. You could do this with your own children's or
grandchildren's pictures.
*The freezer paper makes it easier to color. It gives the fabric more stability.