I'm really sorry to have taken so long to get back here. (As well as running the games class I'm primarily responsible for video production teaching and a heap of administration tasks that I wouldn't bore you with.)
In fact one of the students told me about the Newgrounds competition, a few of them are going to enter, and it reminded me to report back.
The 'pinball/physics' challenge went really well and I think everyone came up with something clever for their 'first ever computer game made in 3 weeks'. Most of them started by looking at the kits for advice and then trying a variation of an existing idea but then putting a spin on it (e.g. Asteroids but with poisonous spiders). Some of them looked really gorgeous as well. If they give permission I'll make a page with some of the better outcomes.
The 'adventure' challenge was more mixed. Stencyl is really good at tiles and play fields made up of small elements in arrays - but it's not great for large images. The guys that made side scrolling adventures did OK, but the Myst flip screen games hit memory limits very fast. This was partly my fault for providing a Myst style example that had run OK in GameSalad but I guess doesn't fit into the way the Flixel engine 'thinks'. One girl tried to use the video loader to make up dynamic backgrounds, which wasn't a great success. In general, loading external images as backdrops and then trashing them for gained memory is a procedure that needs more investigation.
Oh yeah, and LOTS of problems with sound that was mostly VBR MP3 files.
So their final challenge is up now and we'll see what they come up with for their own freestyle work.
To answer Rob's questions - I am teaching at the College of Fine Arts in Sydney, which is part of the University of New South Wales. I inherited the Games course when another staffer quit and was horrified to find it WAS ALL BORING THEORY!! Being a non programmer I had to find an authoring system I could use, which is now Stencyl. I'm not going to be running Games next year (too much other work), but I've handed over to the Computer Science guys. They have been using code, but that frightens off the artists, so they will now use Stencyl and ActionScript.
I guess the theory part of it is similar to the writings of Jesse Schell and Chris Crawford.