EDIT: I got a phone call from my mom asking if it was legal to do this. Lots and lots of info on the internet says both yes and no. See one opinion from Ehow here:
Paper currency is legally defined as a “national bank obligation,” and as such, defacement is regulated by statute 18 USC 333, which states, “[w]hoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined under this title or imprisoned not more than six months, or both.” The key here is “unfit to be reissued.” Drawing a moustache on George Washington does not render it unfit to be reissued; it is still easily identifiable as a dollar bill.
This blog is for my crafting alter ego. I did lots of crafts with my very artistic mother growing up and continue doing them with kids now. I love really good kids' crafts that hold their attention and mine.