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We created a very similiar project for our two boys (and a group of their friends) when they graduated.
The first question our legal office (military base) asked was whether we were creating the DVD (and we had a matching CD with poems being read) for sale, or as gifts to the parents. In our case, we were giving the discs away with other free items at their graduation party.
The students had paid for their senior pictures; distributing them in any form without charge was fine.
At a minumum, you would want to have permission from all of the kids' involved to use their photos in the presenation.
Now, if you are charging for the DVD's, this was another matter all together - if not, (and again, this was the direction we were given), so long as all of the students wanted their images in the project, and there was no fee for the item, we were in the clear.
They turned out beautiful, and I watch ours everytime I want to miss my kids :-)
I hope this helps.
Legal Answer Team
Legal Expert