Make your own play-doh or flubber! My almost 3 nephew (a usually short-attention span kid) will play with play-doh for hours. The next time he comes over we're making flubber!
Also highly supervised melt and pour soap making! I melt the soap in the micro (very carefully, don't overheat) and let him stir, I fill the pipette with colorant/fragrance and he squirts it in, he sprays the mold with pam, I pour the soap halfway, he sprays it with rubbing alcohol to get rid of bubbles. When it sets he puts in a small rubber toy,he sprays again with rubbing alcohol so the soap will not bubble, I pour soap to the top, he sprays rubbing alcohol a final time. After it is set he uses it at the sink or in the tub, and when he uses it up the toy is his to keep!
Here's some pics of some turtle soaps (4th and 6th pics down) and a monkey soap (last 2 pics) that I made for a swap. My nephew found the turtle soaps, which weren't for him, they were for the swap, thusly our soapmaking adventure!http://www.craftster.org/forum/index.php?topic=232552.msg2793151#msg2793151