Now, as a frequent and zealous crafter and constant and zealous mother of two, I often find myself with one or both of my children in my lap while I work. I will be the first to admit that allowing my boys such access to a hot, heavy iron, sharp needles and pins, gigantic scissors, and other hazards is maybe not the best plan, but they know that my dining/workroom is off limits if I am not in there, and it works for us.
An interesting side effect of my sons' proximity to various instruments of doom is that they have both developed a very interesting and ambitious handmade aesthetic. Even my youngest will literally hand me a piece of fabric and say, hopefully, "Ball?" I love the idea that my constant crafting has given them the idea that anything they can think up could be made, by us together.
Taking the time to conceive and create a difficult craft project with your child is worth it--you will love the sense of excitement and accomplishment that both of you get from the process. As an added benefit, the resulting toy's shelf life will most likely be greater since your child was an active participant in the entire process.
A good example of such a project is the portable car playmat that my son wanted to make. He loves his matchbox cars, and he wanted a little town that he could take with him. We didn't find anything we loved, so we decided to do it ourselves. Using photoshop, we designed the town, making sure that it was the correct size to print cleanly to a yard. My son dictated what I should draw and where I should draw it, and helped by using the paint bucket to color the images. We printed the fabric through Spoonflower and waited with excitement for it to arrive. We also picked out some of Riley Blake's fantastic Wheels fabric (hideously, it is discontinued, but I managed to find some at The Quilted Castle) to back the mat. We also used some plain green cotton duck. When it came time to sew, he helped me to measure and make sure that the pockets were large enough for his favorite cars, and even "helped" me sew by sitting on my lap, snipping threads, and removing pins. This is now his favorite gift to give to friends, and I love that he is giving something that he has helped to make by hand, from the ground up.
A few tips for tackling complicated projects with small children:
1. Don't be afraid to take the driver's seat. Make it clear from the beginning that this is not a do-it-yourself project. There are plenty of those, but this is not it.
2. Identify specific jobs that your child can do and communicate that clearly to him or her. My children know that they are allowed to measure with abandon and give tons of design input. I also give them scrap fabric as we work and they are allowed to do whatever they want with it.
3. Let go. When you let your child make key decisions about a project, it allows him or her to feel ownership, but it might not be the choice you would have made. That's okay. There are lots of projects for just you, but this is not it.
Good luck and enjoy! Your child will be reaping the benefits long after the project is complete.