Both Lowes and Home Depot have kids programs on Saturday mornings. Kids are given an apron, safety goggles, a kids size hammer and a kit to make a wooden toy. They hammer it together, and add stickers to decorate. When they finish a project, they get a certificate to take home and a badge to glue onto their apron.
Kids get to use real tools to create a cool project, all while following directions provided (with pictures for non-readers!), following safety rules (watch where that hammer is going!), and using fine motor skills (to pick up those tiny pieces). The constant hammering is a little annoying to listen to, so get grandpa to take them if at all possible!
Bonus: Its free!
(see what I mean about the noise level in there!?)