I got the first idea from Disney's Family Fun page: http://familyfun.go.com/crafts/house-o-lantern-785223/ . Of course, I subverted the idea for my own nefarious purposes. I used brown kraft paper (the kind you can get at Home Depot or Lowes in big rolls) and tissue paper (cheap now that stores have started selling Christmas stuff at the same time as Halloween decorations).
First, I measured our windows to figure out how long the paper should be cut. The roll was wide enough that two sections would adequately cover both windows.
Next, I drew a giant scary eye on one sheet and a mouth full of sharp scary teeth. I cut out this design and then flipped it over and traced it onto the second sheet (therefore both sides were equally symmetrical).
Then I taped sheets of red tissue paper onto the back of each design (making sure it was the correct side). The only issue I had was that the paper tended to want to roll back up, so I used books to flatten it.
On the evening of the party, we attached the paper to the wall using painter's tape (so it wouldn't make marks and would be easy to remove). We put a lamp on one of our plant stands and a stack of books and lit the face from behind. Here's the final result:
The other paper craft I did was Halloween luminaries. I purchased some white paper bags (around $2.00) and drew faces on them. The design ideas came from Googling 'Halloween luminaries'. I carefully cut out the faces. Then we filled the bags with dirt from our yard (cheaper than buying sand!) and put a tealight in each one (already had the tea lights). They came out more cute than scary, and would be a great way to welcome trick-or-treaters to your porch.
Happy Haunting, Boys and Ghouls!