After sleeping on it, I agree that doing something useful, like lighting LED's with the generated voltage, is unlikely. Just use a voltmeter. The students will get the same competitive spirit. As for the motors, consider the tiny motors used in servos, vibrators, and so forth.
One other thought: I drew the impression from your post that the turbines will all be some version of a paddle wheel. Those (radial designs) are harder to make than propellers (axial). If you allow propellers, then pitch, diameter, and blade cross-section become variables the students can explore.
How are you going to provide a controlled water flow to evaluate the different designs?
John