The key here is to define what you want it to do, but also, what you don't need it to do. And what they should always have on themselves anyway.

I buy a lot of stuff in bulk and it would be difficult to hit $5 per kid.

My advice would be to pare it down to the bare minimum. Its really easy to make a super long list of things that everyone should carry, but for $5 and considering these are scouts...

For $5 I think you could do:
1) something to light a fire.
2) a quality whistle
3) a heatsheet that can be used for signalling
4) the tin (flash signal, etc)
5) A cloth (bandage, etc)
6) some cordage
7) a small paper reminder (these are scouts who are learning!) of the alternate uses of many items. or print that on the cloth if you're feelin' froggy.

No way in hello that this is going to fit in an altoids tin.

That would be the bare minimum in my opinion.

They should ALWAYS have a knife on their person, and it should not be considered part of the kit due to the low dollar amount.

I picked up some of those DX lights for myself, wotta deal.

There are a lot of other cheap stuff you could put in there but then you would start losing quality.