I have not done this myself, but I would probably start with something
like this:

http://www.toysrus.com/product/index...ductId=2413306

and modify different pieces of wood to interact with it. When you
look at the pieces, they are about $1 a piece. I am sure you could
find something similar for less.

You could also make yourself your own Tinkertoys (or just buy a couple
of sets) with some time and imagination, and not have to worry about a
choking hazard.

Just a couple of thoughts.

Robert