One of the things that I'll need to explain is asynchronous serial communication, which is how the arduino communicates to the FTDI chip (or other serial devices) to communicate to a computer via USB. I found some resources for arduino Serial stuff (including an article about using PWM for servo motors so that the software serial library doesn't get screwed up by the current servo library's use of interrupts).
There's a good wikipedia article about asynchronous serial.
There is also the arduino description of the software serial library, which is useful for describing how serial works (and how to make it work without hardware serial).
I saw an article about a mini quadcopter that uses an ATMega128RFA1 (8 bit processor with built in 2.4 GHz transceiver). It's pretty cool, though the website didn't have a lot of build information in the post (there's some more stuff in his earlier posts, but it's not a clear cut thing to look at and know how to build your own without previous knowledge. Maybe I didn't look long enough.) Good instructions or not, it's a sweet project.
Speaking of Quadrotor helicopters, there's a nice youtube series done by The Crash Cast about building a tricopter (three rotor helicopter). If I ever have time to build one, after all of my other projects, then this is where I'd start. Maybe after I'm done teaching about registers and bits I can start teaching about PID controllers with this. How cool would of an advanced project would a quadcopter helicopter be (or tricopter. I don't judge)?
Ever wanted to control a bunch of LEDs and minimize the number of pins used without using something like an LED strip or LEDs that have processors so that you can address them using or some other protocol? Well then, meet Charlieplexing and a handy tutorial all about how a clever use of pins can turn on lots of LEDs with clever use of the diode part of the LED.
I came across an arduino in system programer shield. It could prove useful if I want to produce and test a bunch of raw ATMega328p chips for some project.