We have just had Airserver (http://www.airserver.com/) put onto your computers that project through to the IWB. It's incredibly simple to use and seems to work really well. Agree you can use a vga cord but for me that would require either unplugging the projector feed from my PC which is hugely annoying or running it direct down from my short throw projector, neither of which is as simple as airserver. It's relatively cheap and you can have it for free for 7 days to trial. Does need good WiFi though.
Not quite what you are after - but have you tried guided access? This locks the child INTO a particular app, so doesn't give them access to anything except what you want them to play. Very clear instructions for turning it on and then using it with specific apps here: http://www.imore.com/how-enable-guided-access-iphone-and-ipad
Once it's enabled in your settings area you simply open the app you want, triple tap the home button, then click start. You have to enter a passcode and then give it the child. They can't quit the app without the passcode.
Having pre-school age children I've always wanted multiple logons/users to my ipad. I think this would also fix the issues people are discussing - if all apps are installed to the ipad but under certain logons you could only access the 'school' ones that would be great! Guided access to a folder would do much the same thing. I can see guided access as it is being particularly useful for special needs or very young children. Probably a bit cumbersome for everyday use in a busy classroom, especially with older kids. Still a great feature to know about though.
Haha! My mum has a kindle and I don't like it as I'm so used to the iPad. My 4 year old is completely competent using it, including deleting and moving apps around :-)
I love garageband, I use it with my music classes (12 year olds). It's really easy to use and the kids get a real kick out of the rhythms they can create. I haven't really used the mac version much but from what I've read it's pretty similar. Definitely worth the money, think it was $7?