recipe for salt dough: http://123mytoddlerandme.blogspot.com/2009/08/salt-dough-recipe.html
Picture Frames (either standing or magnet variety) Unfinished wooden frame that can be painted.
Bingo dabbers would make a funky polka dot design. Or perhaps decoupage with tissue paper, construction paper, magazine or catalogue pictures, old Christmas Cards, or even photographs.
Tote Bag - Canvas Bag and Fabric Crayons.
Haven't used these before but apparently the child draws on the bag (or shirt) with the crayons, then you iron the design with a piece of wax paper on top. Follow the directions on the crayon box since the directions may vary according to the brand.
Hot Trivet - Ceramic Tiles that are painted by the child and then clear coated with varnish. Glue felt on bottom to prevent scratched tabletops.
Vase - Clear Vase that is decoupaged (glue & paint brush - she'll love it!) with tissue paper.
I have many styles of clear vases that I find boring (I prefer coloured vases because I don't like seeing the stems) and will give away once decorated as presents. I'll make sure I get one for Christmas too! :-)
Candle Holder - same idea as vase - decoupage tissue paper onto candle holder. My 2yr old made this for her Grandma's birthday:
Magnets - Using wooden shapes, let child paint or colour. Stick a magnet on back. Another option: cut a tree shape from green felt. Let child help glue to cardboard or cardstock. Let child glue on small buttons or beads for the tree decorations. Glue a magnet to the back.