The no-tie are not good for the hospitals because the fringe can get caught in equipment. You probably know this, but you will need to make them larger than usual because the fringe does take up more of the fabric and makes the blanket smaller than what you start with. The troops in Afghanistan can use anything that will make them warmer in the winter. The colors don't have to be muted for use in their sleeping quarters. If they are troops on the go, you would want to make them colors that blend into the landscape. Snow, desert, depends!
If you have sewing machines available you could sew the two layers together, which is much faster. You can just put the wrong sides together and stitch around the edge. If you have adults helping they could do the sewing and the fifth graders could do the folding or rolling and tie a Christmas Ribbon around them, then include a card. They could decorate brown grocery bags and wrap the blankets in them.
I don't know if this helps. Maybe it will give you some ideas.