Compost your wax paper cups. If the wax is soybean wax, then it can be composted.
Make a string phone. Take two waxed paper cups. Using a pencil, punch a whole in the center of the bottom of each cup. Feed a piece of yarn through the hole in the bottom of one cup. Knot it inside the cup. String it through the second cup. Knot that side inside that cup. Now your kids can pretend to chat on their new string phone.
Plant a flower. Place a handful of potting soil in the bottom of a cup. Place a seed on the soil. Cover the seed with more potting soil. Water lightly. Tend to it daily. You can grow starter plants or flowers easily in these cups.
Create a mosaic cup. Cut a couple pieces of colorful construction paper up in uneven pieces. Glue the pieces onto a waxed paper cup. You can either let it stand like this or take clear tape--try wide clear packaging tape--and tape the outside of the cup. You may need to do this twice to cover the entire height of the cup. This will protect the outside design and still allow you to reuse the cup as a drinking cup.
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