I got a kick out of this post on one of my favorite blogs, Kosher on a Budget. Blogger Mara is a passionate coupon user. She combines coupons with store sales in order to get Cheerios for free or almost free on a regular basis. Unlike myself, she has built up quite a stockpile of cereal (I mostly only stockpile toiletries). Wondering what to do with all the Cheerios you've stockpiled from your coupon adventures or bought on an ill-advised Costco shopping spree? Mara gave her kids string and Cheerios and set them to work making Cheerio necklaces. This looks like a great project for preschoolers and is not so different from the fine motor work the Early Intervention teacher uses with my 2 year old! Can Cheerios be occupational therapy? Why yes, they sure can! As my mom always says, "How did children develop fine motor skills before there were Cheerios?"
You can also try dying excess penne pasta and letting kids string that, too. We recently made chains of food-coloring-dyed pasta to hang as decoration in our Sukkah. Lots of fun, and very doable for our toddler even if he ran out of interest several noodles in and left Ima to finish the rest of the chain.
The post also suggests adding cereal to trail mix, which with a high-fiber cereal is a great way to sneak some fiber into picky kids' diets. Commenters on the post also suggest ways to use leftover Chex and even how to use cereal in place of bread crumbs!