Well, personally, I've used pentane which works pretty well due to the low boiling point (36 C).  But I would never let students do anything with fire, of course.   That said, isopropanol/water works great for the burning $20 bill trick, especially when it's one you've taken from someone in the audience.   The demo is good - but letting students play with fire in that manner is, of course, professionally derelict.

Alas, there are things like this out there...note the discussion of "Safety & Additional Information" that contains the very comprehensive instruction of "Don't get burned or set your house or yard on fire" : http://chemistry.about.com/od/funfireprojects/a/fireballs.htm 

What this teacher is talking about leads to kids doing this on their own.  Which leads to this:

            http://www.spokesman.com/stories/2011/nov/10/wsu-student-was-playing-fire-when-burned-self/

            http://www.washingtonpost.com/wp-srv/aponline/20010129/aponline125541_000.htm

            http://www.youtube.com/watch?v=1Sf0D-1UacE

            http://articles.latimes.com/2009/nov/26/nation/la-na-burn-victim26-2009nov26

            http://www.fox43.com/news/wpmt-youth-burned-lebanon-county,0,7829067.story

            or kids trying it with something else, like gasoline....

Obviously, try to dissuade this person based on the high risk, near-zero pedagogical content, and personal/professional liability.

And then tell her that if you ever hear of her even contemplating doing this with students again, that you'll contact the principal, superintendent, school board, fire marshal, and local media to make sure it stops.   And that she ever has a student injured or killed as a direct or indirect result of this class activity that you will be first to testify for the prosecution/plaintiff against her.

Rob Toreki