The key to using your terra cotta pot as a planter is sealing the inside before you paint the outside. Brushing on two or three coats of oil-based polyurethane sealant will seal the inside of the pot and protect the soil from seepage from the exterior materials. The outside of the pot then be decorated with paint, markers, stencils, rubber stamps or any other art medium.
Small terra cotta pots can be transformed into animals, using felt and markers. This is a great craft for elementary-aged children. Each child chooses an animal to make and cuts its ears and tail from felt. Other characteristic features, such as a lion's mane, can be cut from the felt as well. The child attaches the felt with glue and draws a face on the animal.
Terra cotta pots are great for making seasonal crafts. Flip a small pot over and attach a bell inside for a festive Christmas tree ornament. You can make red, white and blue "liberty bells" for the Fourth of July. Several clay pots strung together can become a wind chime for those breezy spring days, and larger clay pots and saucers can be decorated and stacked to create a birdbath for the summertime back yard.