safe paint for wooden peg dolls

[megincl]

I'm looking for suggestions here:

I'm hoping to paint some wooden pegs in rainbow colors. I'd like a watercolor kind of look, as opposed to acrylic, and then I'd like to seal it, hopefully with beeswax. 

Any suggestions for supplies? They'd be for DD, who is almost 1 and loves to put things in her mouth. So, I want the gentle colors for look but the supplies for safety, too.

Advice on technique greatly appreciated too.

[mamakims]

I just use watercolours. Make sure they are non-toxic but just paint on the wood as you would on paper. Let dry and then sand with fine sandpaper and buff it with a cloth to remove excess. Then apply a thin layer of tree balm (mine is 4 parts oil (olive, apricot kernel, jojoba, etc) to 1 part beeswax with a few drops lemon essential oil). Let sit for an hour then buff off with a clean flannel cloth. :)

I got my instructions from the Natural Suburbia blog... you can search there for how to pics. Good luck!