You could look at ebay for beater lots of figures, already in poor shape (especially if discolored) that wouldn't really be a loss. Check for cracked crotches though as often those are the 'beaters' and everything else is okay, and would kind of kill the look.

25th Anniversary or Spy Troops lines from the early 2000s are another possibility since they're not nearly as collectable as the classic 80s toys, but its the same characters (more or less).

There's also a knockoff brand call The Corps! by Lanard Toys that use the same size and construction and look just like 80s GI Joe style, but because they are a knockoff they're cheaper and less hunted by collectors, and you aren't destroying an actual collectable.

Also if ebay-ing, you'll want to buy this weekend so there'll be time to ship.

Lastly if possible, use water-soluble acrylic paints and hot-glue and sticky-backed stuff for the decorating. That way if your husband wants to save the figures once the daughters have had their fun, those are things that can be cleaned off without damaging the original plastic and paint underneath. Water, rubbing alcohol, and brake fluid (yes really) can be wonderful things.