Is it safe? Even though Crayola does not publish a detailed and specific ingredient list, they do formulate their crayons so that toddlers can eat a whole box of the stuff without suffering anything more serious than a stomach ache. Crayons consist mainly of paraffin wax and non-toxic pigments. Wax is a major component in any lipstick or chapstick, and crayons' pre-mixed pigments will give you more choices, at less cost than either food coloring (I've tried that too) or the powders and gels cosmetic suppliers will sell you.
This recipe works surprisingly well. The colors last longer, and stick to your lips better than regular commercial lipstick. No need to worry about evidence left on shirt collars, or on cigarette butts carelessly left in ashtrays... although sometimes, depending on the specific crayon color, the pigments might need a little extra smacking of the lips to disperse evenly.
If you're using a chapstick tube (or a lipstick tube of a similar size) and you're making this as a gift, you can download a pop-up, pop art lip balm holder I designed. The template comes in two versions, one with text and the other with an empty speech bubble in case you want to add your own.