Shrinky Dinks were the favored rainy day activity in our house growing up, but this project is slightly more creative and not much harder. This would also be a good (and inexpensive) way for kids to make gifts for their teachers or friends or perhaps a homemade set of letter magnets to practice spelling. How About Orange walks you through the steps on her blog.
You can find the short tutorial here. Since it involves the oven and a glue gun, you'll want to supervise young children, but you can leave the art up to them.