I originally had this idea a few years ago, during one of the Halloween contests. Unfortunately, due to time constraints, lack of effort, and lack of coconuts, I could not.
These little guys will last year after year (pumpkins are meant for eating, not rotting on your porch in two weeks). Just be sure to watch them so they don't catch fire (like most candles). Because, while he may look friendly, this b**** wants to burn down your house, and will sacrifice his life to do it. Crafty, evil little things.
Step 1: The Goods
1. A victim. (I have three)
2. A dremel. (for cutting)
3. Tea candles. (for lighting)
4. Sandpaper. (for sanding)
5. Something to scoop out coconut flesh, like a grapefruit spoon, knife, or chisel. Not pictured.
Step 2: Drain the Coconut of it's Fluids
Stick a screwdriver in the eye of the coconut and press. Mine went in easily, without any need for pounding. Wriggle it around to open the hole wider, and then repeat it for the other two.
You can also use a drill, or dremel.
Drain into a cup, if you like to drink that nasty swill.
Step 3: Sand 'er Down
Then, take the sandpaper, and sand down the rest of the fibers and shell, leaving it nice and smooth. Don't sand too much. Try to leave some of the natural grooves. They're nice to look at sometimes. Sometimes.
Step 4: Decapitation
Use the dremel to score the line to the flesh of the coconut, and pop off the top with a spoon/knife/etc.