Somehow, I underestimated the amount of time that this project would take and, as a result, house construction took over the dining room table for over a week. Luckily, we weren't hosting Thanksgiving so the Village was able to stay a "work in progress." Directions can be found here.
For other crafting moms, my son enjoyed the following elements of this project (not necessarily in this order): ability to use exacto knife, the glue gun, and to my surprise, the actual decorating of the houses (with the glue gun.) In the photo below, we've emptied the cereal boxes (the small ones) and carefully opened them.
Overall, we did one layer of gesso and two layers of paint.
The houses - under construction.
I bought various picks and other items at Michaels which we cut down to miniature to fit the houses. I can tell you, my favorite part was the actual house construction. It's pretty addictive.