I was going to say ESTES model rockets but it sounds like they are beyond that. However, there are amateur rocket clubs that take that to the next level - think sounding rocket altitudes whereby the club has to phone up the FAA and NASA for launch window clearances.
Also a +1 for HAM but that is more like an after dinner/rainy day activity because it's (generally) indoors. Studying for the exam itself is a lot of fun if approached as to the Physics of how the electromagnetic spectrum works and how we've harnessed a bit of it.
Small engine repair was mentioned on bikes/quads, but everyone needs a lawnmower tuned, log-splitter recarbed, weedwacker flushed.
Not sure of location but "pet-sitting" is a thing here. When families go away for summer vacays, they can take the dog, but the fish tank, guinea pigs, chickens, cats, goats, sheep, what-evs, all need looking after. I know this is not a dad/kid project but it will fill time and earn some funds.
Kites/sail-carts?
Also a +1 for forging steel. Start making various goofy blends and learn how to make blanks for knife making. This is a huge youtube/internet rabbit hole. Learn how to sharpen a knife on a whetstone.
ETA: you said you had a decent machine shop. Does that include a Bridgeport mill (or similar)? Learning basics on a knee-mill (or any kind) is invaluable. Being able to make something from nothing is a very fast dying art. Learning mechanical drafting/CAD oldschool and combining with tolerances and ability to machine to them is almost a superpower now.
ETA#2: Instead of only you feeding them ideas - engage them and ask what they want to accomplish or attempt to learn about (I am sure you are already doing this so no shade). Scratch, saw you already are engaging them on what they want to do.
ETA#3: Bushcraft/woodsmanship/survival prep. Making and assembling an Altoids sized survival kit is another deep rabbit hole. Train on the ability to use it and then go use it in the backyard - make a shelter, a fire. Get lost (not really lost) and ask them how to navigate out; USGS orienteering and geo-caching, can also be added as extensions.