Improvisation usually is a hit. When I had my practical exams (I'm actually a drama teacher, although I've never made anything out of it yet), we had to go to a school and teach the kinds there for a week or two; daily lessons, of course. I successfully arranged a live RPG (which meant tons of work for me, but it was fun), and we did a lot of regular drama exercises with them (although not the boring ones like walking around in the room - you'll have to spice up those, but even then they can be fun for the kids) and, of course, we did impro. Do impro with the children, they will love it and you'll probably howl with laughter (at least, so did I; my children were so imaginative and downright funny I couldn't help myself).
What's most important is how you behave towards them. If you become too strictly "teacher", they'll be afraid of you and won't perform as well as they could; if you're too much of a "buddy", they'll run out of control. Let the children see that you're also having fun, and if you're nervous, try to keep it in. Know what you want them to do, and show it to them in a clear, simple way. And don't underestimate them - children are a lot more intelligent than they get credit for.
Some standard drama exercises that I've found to work well with children:
- Mirror exercises (work in pairs standing to face each other, one child moves his hand(s) and the other tries to mimic this. Eventually, they swap roles. In the end, if they're really good, it will be impossible to see who's the leader.)
- Mime games (of the kind "what am I now" or "what am I doing now")
- Zip, zap, boing (circle game.
This is a variant of the game. We played it like this, but instead of yelling "zoop" we said "boing" and would mimic the "zip" bouncing off of you and onto somebody else - eg. the one you're pointing at. Children seems to find the boing very amusing.)
Just as a last note, don't be scared to do classical drama exercises with them. It usually works quite well.