I highly doubt Toady would be up to rewriting lots of flavor text in-game just a little project like this. If he was, that'd be awesome though. Point being, any ideas that involve restructuring the game proper are pretty much out of the question unless someone knows how to screw with the memory, and that would still mean running other programs with DF, which is complicated.
Remember, Rathen (the OP) was talking about 3rd grade kids here. All bad words have to be taken out of the dictionary. Alcohol has to be out, because otherwise there'd be hell to pay, brewing will be replaced with non-alcoholic stuff. Important thing to remember here is that it doesn't have to be historically accurate or relevant - what's being taught here is critical thinking and problem solving.
I could write for hours about light-fantasying everything, but some things that would need tweaking is human pop/civ numbers. Though I like the idea of there being no traders, it'd be easy enough to switch trade on and off with a simple raw tag. The notion comes up that this could be Oregon Trail 2: Now What?, which is cool, but I think that's kind of out of DF's scope. Besides, fantasy is fun, and let's kids take more an interest. Some things like the Pits are right out though.
To make farming harder, growing seasons need to be tweak (to not year round), and growth time needs to be a lot longer. For instance, if something like wheat could grow in spring, summer, and autumn, but had a growth time of 250 days, you'd have to plant whole loads of the stuff real early in the year to have enough food next year.
Making wildlife more of an issue is hampered by the limit on animal group spawns. Uping savagery in world-gen helps but not much. Making most animals do bludgeoning damage is great, but dangerous animals should have a secondary goring attack to keep them really mean. I remember drawing a very graphic book about dinosaurs in the first grade that didn't get any undue attention (went over well with my fellow students even), so on consideration I don't think blood is really a problem. Ditto for vomit and such.
I'm going to start writing up a design document tonight. Too many ideas, need to put them in order.
Can't you just rename Alcohol into something harmless? Like Juice!
I vote for Frothy Mugs of Water.
Win. Probably not possible though.