When I came across this idea I knew it was something I could do. Go check out how to make your own Cereal Box Theater.
Don't have any puppets for your theater? Have your kids draw their own on card stock then cut them out and glue them to Popsicle sticks. Or you could just print out some animal pictures on card stock to do the same thing with. Here are some cute one's to try by Lotta Bruhn. These are stickers but they would work perfectly.
I'll post a picture when I finally make it.