For my daughter's 2nd birthday we had an elmo pool party. I send out store bought elmo invitations, but cut and pasted a picture of my lil girl in her bathing suit in her kiddie pool on the blank side so the 2 yr olds could relate to who the party was for when they saw it). We do not have a pool in our yard, but what we did was set up 4 BIG kiddie pools etc. One was shaped like a big dalmation dog that squirted water from the tail, one was the ballpit-like type that has a tower on one side that let to a slide that dropped into a pool of water. It also had a big cannon that squited water (which the boys loved) and we had 2 just basic round pools. We also had an elmo water sprayer to run through and a long slip-n-slide setup. We had tons of water toys like small balls, floating boats, water squirting animals etc. for the round pools that I basically got all from the Dollar Tree.  We prefilled the pools before the guests arrived but did not cut on all of the water spraying items (4 in total) until it was time for the kids to play in the water. (It is a good idea to have most everything outside of the pool activities set up away from the pools etc so there is not a problem with the kids wanting to get over there before it is time.) When the guests arrived, the 2 yr olds went to a section of the yard that I had laid out neats sheets (like water) all around and did a neclace craft. I used the paper twine from Michaels and bought colorful plastic fish, sharks, etc to put on there along with real seashells that my daughter and I had picked up along the beach. We only kept the ones that already had the lil holes at the top. They are perfect for neclaces as you don't have to do anything but just string them on. The kids really loved their neclaces after they finished them. I also had a coloring section set up with printed pictures of elmo that I got off of a website in case some finsihed the neclaces earlier than others. After the craft (i just did one since 2 yrs olds attention span is quite limited), we all mingled a little together since this was friends and family and then started the actual bday celebration with cake etc. For decoration around the eating area, I had gotten several large boxes (like dishwater type boxes) and drew  elmo's head (using spray paint) on several. I wrote "welcome to \*\*\*\*\*\*'s Elmo pool party" on one. Then on a refrigerator box, I cut out one side and drew a life size elmo full body. I was surprised at how easy elmo is to draw  (I am not an artist by any means). I just used spray paint and a lot of it by the time I was done-ha! I used elmo plates, napkins, cups and party hats for the kids. I bought an elmo birthday cake at a local bakery that had the elmo figurine and beach ball with water etc since it really fit the theme. We had chips, ice cream, and the basic snack foods for a party without the meal. After my lil one opened gifts, we let the lil ones dive into the water fun. I have never seen a group of 2 yr olds have such a good time! By the time it was over, the ground was pretty wet and then they had a good time splashing in the puddles. The party lasted 2 hrs and as take away gifts, I bought store bought elmo gift bags and filled them with an elmo coloring book that I printed off of the web. It had elmo and a different shape on each page. I made a front cover stating "thank you for coming to my 2nd birthday party". I also included a box of sesame street crayons from Dollar Tree, elmo fruit snacks, elmo stickers, fish stickers, a plastic play watch and a small ball made for the water. In addition, as part of the decorations, I had bought elmo beach balls and elmo round intertubes from the Dollar Tree. I put a ball on top of each intertube (so it wouldn't roll all over the yard before pool time) and the kids played with them during the pool time and then got to each take home a big elmo ball and elmo intertube.  The kids being 2 yr olds didn't want to leave the water fun, but after discovering that they could take home the beachballs and rings, they all parted happily!  I got thank you notes from the guests (which was unusual to me but much appreciated)and we sent out store bought elmo thank you cards.