One of my favorite toys as a kid was Creepy Crawlers. Introduced in 1964 by Mattel, it was a kit that let you make rubber insects, spiders, snakes, lizards etc. It came with a set of metal molds, squeeze bottles of liquid plastic called Plastigoop, and an electrically-powered, 390 degrees Fahrenheit open-face hot plate called the Thingmaker to cure the Plastigoop. It's the kind of toy that would be deemed to dangerous today because of the high heat and shocking hazard (the kit came with a mold cooling tray that you filled with water and placed next to the Thingmaker).
I may have gotten a couple of first-degree burns using Creepy Crawlers, but I never regretted it. It would occupy my friends and me for hours at a time. My kids would have loved the Thingmaker as much as I did.
The Fright Factory was an especially cool Thingmaker toy. It was a kit that let you make macabre prosthetics: scars, long fingernails, a third eye, a diseased tongue, fangs, etc.
Nightflight's Bryan Thomas has a good article about the history of the Thingmaker line of toys, with lots of images. And Bob Knetzger wrote a terrific article about Mattel's line of DIY Toys for MAKE.