I was thinking the same thing. I was even considering dragging out my pic programmer to try it out :D
Seems like a worthy project for any self respecting hacker, get the cheapest possible ps2 keyboard you can find, integrate a battery compartment and an lcd...
Possibly even talking to phone recyclers, those Nokia phone lcd's aren't hard to work with.
Sourcing from DX for example
Cheapest 2 line lcd: $4.70
Or you could go up to a nokia graphical lcd for $4.90
You can grab 3 ATMEGA8-16PU's for $6.30
Keyboard for $15.12
AA battery pack $1.90
Buying in significant bulk (or even directly from manufacturers) would be cheaper - heck I have a couple of spare ps2 keyboards I could throw in :D
In fact there's two opportunities here.
1) for us in the rest of the world to chip in and build (hackerspace project for a week perhaps?)
2) teach the kids something about electronics and make building an 8 bit computer part of the course work :D
But having said that, how cheap can OLPC go?