Lots of good ideas already posted. Likely most if not all would agree on the importance of safety. With the age group, I believe it is important to make it fun, making projects that students can easily complete while also being able the afford materials and supplies.
If you want them to work with hardwood, ash is generally available and about the lowest cost hardwood that looks good with clear finishes. Importantly, it is also very easily machined without much risk of tear out or splitting. For painted projects, poplar is a good choice with it's fine grade and easy workability.
If you want them to become interested for the long haul, although hard to avoid for woodworking projects, try to minimize the effort expended on sanding. It is my least favorite activity and can consume a lot of time if manually completed.
I would also try to instill a tolerance for errors and mistakes. They are part of the process for even many of us veterans and present creative opportunities for correction or concealment.
Someone mentioned a lathe with which desirable and quick projects can be completed (for those who may desire more immediate gratification). That might be best for the 2nd level class. You could also undertake to build a treadle lathe if expenses must be minimized. Please visit the turner's forum for some of the nicest product displays available anywhere. Forum members in your area may be willing to donate some materials and supplies.
Best of luck and enjoy yourself. Having done some teaching in the past and having numerous siblings in the trade, few occupations can be as stimulating and gratifying.
Rustic? Well, no. That was not my intention!