Have them cut t-shirts from felt, decorate and hang on tree. Never done it but it sounds like fun. You could even make hangers from wire. You could cut two from one piece of felt (felt is very inexpensive) and use other color felt pieces to decorate with.

Or lay their hands on the felt, draw around it, cut it out and have their names printed on with paint or glitter.

Sounds like a cute project for them.

Would t shirts go with a woodsy camping theme? Acorns and pine cones can be painted or hung natural. mini tents could be made, wild animals also hung on the tree. Mini "books" by famous outdoor writers. Colorful birds and insect and butterflies could be cut out of magazines and hung or drawn colored and hung. Bats, spider webs and mushrooms.
Or not if you want to keep it sweetness and light.
Kathy

You could have them trace little t shirs on paper or felt cut out then string together for a garland .