Michele, there have been metallic paints around for years. They have finely ground metal powder mixed with the paint to give it a sparkley effect. The problem with this is that the metal that they use is aluminum, which is not magnetic. Even if it were magnetic, there would not be enough film thickness to have enough iron or steel to attract a magnet. You might ask your friend for more information.
You might consider making a big flannel board out of cloth and hanging it up in your kids room. Then you and the kids could work together to cut out figures out of more flannel. The kids can move the flannel pieces around on the flannel board to act out stories, make words out of flannel letters, or whatever. The people at big fabric stores should be able to help you in getting the right kind and colors of fabric for this.
One thing that I learned a long time ago is not to make anything too permanent for kids. The swing set or sand box that you buy or make today will generally outlast the kids interest in them by a lot of years. For example, you might think that a sand box is a great thing for your 4 year old, and it is, but the oldest that your kid will actually use it is about 8 years old. Unless you plan on a lot of kids, it is really not a good idea to build a sandbox to last 30 years. You will be mowing around and tripping over that sand box for a lot of years.