i'm glad i don't have to do it!!!
as you may know if you want the site to look good it should follow the same layout, the kids have enough to learn i would definately use css!!
are we doing raw html here ??? Or using a wysiwyg editor??
i was spend the first few sessions give them a crash course on how to make websites as from experience of teaching kids how to make websites its not easy!!!!!
Then once they no the basics look at some decent websites click here bbc is always a good starting point and look at the design , note CONSISTENCY. You may then want to get them to draw an outline of what it should look like.
I agree that graphics will be a MAGOR problem here, and am not entirely sure what to do here, maybe make some decent examples and let them modify them
at the end of the day you can't teach a bunch of kids how to make a website and they will suddenly be making professional websites so it isn't going to be great. To be honest i feel sorry for you as they seem to be expecting something which just isn't going to happen!! :)