This is soooo cool. I have been teaching my son about programming using Scratch.
The biggest problem is the huge gap between the kinds of programs a kid can make vs. the kind he can easily download. When I was a kid the kind of programs you could type into a C64 were not that different than anything you might get, so you had an incentive to learn how to do that.
Using Scratch to control hardware could be a really appealing way for them to learn about programming.
A favorite memory of mine is building an RC monster truck with my dad when I was a kid. Combining physical projects with Scratch sounds like something I would have loved. (Who am I kidding, I'm excited to do this myself as soon as I have some spare time :)
This fills a very important void in my family being that my kids can't really type (well or at all) but they love using Scratch. We just got an Arduino but the environment is a bit daunting for them. I haven't had the chance to download the Scratch for Arduino environment, but if this works, I don't know who will be more excited, me or the kids.
I just got my first Arduino yesterday. It came with a light sensor and some other pieces as part of a starter pack. This is my first project of any kind dealing with anything EE-related or even C-related. This could help get used to some of the concepts surrounding programming for an Arduino.