So I was inspired by Jennifer who made a hub about 15 Uses For Newspaper, which are clever ideas to recycle the newspaper, very nice hub indeed I recommend you to read it.
However, I was moved for the number 7 in the list, "Get creative" and I remembered that show at discovery kids called "Art Attack", when this guy used some glue, water, balloons and stuff, and of course newspaper, to do very great and funny stuff.
The recipe was very simple, just add 1 part of water to 3 parts of glue, soak pieces of newspaper randomly cut by hand, and paste them into the balloon, then add some details with carton or just more "glued newspaper" and there you go, after the shape is finished and dry, paint it with watercolors and there you go... a very fun piece of art :)
Also you might want to pop the inside balloon with a needle, and add some varnish to last forever.
the possibilities are infinite, I'm uploading some creative examples for you to do, it is easy fun and will keep your children busy for a while, and also will develop their motor ability and imagination.
Here are the examples: