What is the protocol for kids who want to "sit it" with some local groups?
This is a very important question, because if done improperly, the experience of “sitting in” could be very negative. Unfortunately, I have seen young, improperly prepared student musicians laughed off the stage on several occasions. Not everyone has the fortitude demonstrated by Charlie Parker in 1937, to rebound and motivate one's self following the humiliation of a public ostracizing. (Drummer Jo Jones threw a cymbal at his feet to indicate his displeasure with young Parker’s playing.)
If you are describing a formalized “jam session”, encourage your students to attend once or twice to simply observe, without trying to play. In almost every subculture, there are acceptable and unacceptable ways to behave which are learned by observation and incremental involvement, rather than jumping in head first.
I would suggest that you visit the restaurant where the musicians are playing and introduce yourself. Express that you have some students who are interested in sitting-in at some point, and that you want to make sure it is a positive experience. If they express hesitancy, I wouldn’t push the issue. If they are receptive, ask them to suggest a song or two that you could help your students prepare. You might also consider hiring the musicians to appear as clinicians, so that you can stage a mock jam session in the safe environment of your band room.
The students should know the song’s melody, form and harmonic progression by memory. They should not bring fake books onto the band stand. They should be aware that songs are not always performed in exactly the same way, and they should be flexible enough to adapt. (For example, there may or may not be an introduction, the tempo could be fast or slow, the order of soloists is not fixed etc.) If they plan to play “a blues”, they should have a melody (head) prepared, such as “Billie’s Bounce”, “Sonny Moon for Two” or “Tenor Madness”.