I found the solution to the expense in a makezine podcast. It features a compressed air rocket launcher, using PVC pipe with an electric irrigation valve, and a standard bike pump. The same assembly is featured in Make: Vol 15.
I recently put this launcher kit together. It was very easy and took me maybe 30 minutes. Assembling the launcher is very well documented in many places (including the kit instructions).
This instructable focusses on assembling the rockets. The kit has ok instructions but I found the templates, and techniques described produce a rocket that's good for maybe 6 launches before the rocket becomes so maimed that one has to build another.
My own template (developed based upon the original) improves upon the "design" and construction techniques to produce a rocket that can take 10 or 15 launches worth of punishment before becoming a crumpled wad of tape and paper.
Step 1: Gather Your Materials.
1. 2" wide painter's tape.
2. flexible measuring tape.
3. untreated facial tissue (the rough, hurt your nose kind), or toilet tissue.
4. modeling knife.
5. straight edges.
7. Launch Tube Blank.
8. paper template.
Step 2: Assemble the Body Tube.
2) Wrap the Body Tube in short overlapping lengths of tape. The lengthwise overlap should be no less that 1/2".
3) Work from one end to the other with overlapping widths of tape. The width-wise overlaps should be no less that 1/4".
Note: Keep tension on the tape as you wrap. It's easy to do this if you allow the Body Tube with the Launch Tube Blank inside, to touch the surface of the tape roll as you wrap. In this way it will be easy to maintain good tension. Burnish all tape to make good contact with the paper.
Step 3: Install the Pressure Cap.
2) Push the wrapped Body Tube to be flush at one end of the Launch Tube Blank.
3) Place the Pressure Cap on the end and tape with long, thin strips of tape to what will become the nose end of the rocket.
Note: It's easiest if you begin by crossing the tape strips perpendicular to each other, working around the entire perimeter of the Pressure Cap. This is the assembly that enables the rocket to launch. A lot of air pressure is hitting this thing so make sure it's secure by burnishing the tape for good contact. If you don't it's likely to blow out and "pop" the head of your rocket off.
Step 4: Assemble the Nose Cone.
2) Pack the Nose Cone with tissue paper, one sheet at a time. Compress the tissue as much as possible into the tip, and as you fill it, using a Q-tip with one of the cotton ends removed.
3) Add enough compressed tissue to fill the Nose Cone to within 3/8" of its open end.
Note: This rocket design has no recovery system. It goes into the air and returns, ballistically, to the ground. As such the Nose Cone takes a lot of punishment. So pack it reasonably densely.
Step 5: Install the Nose Cone.
2) Using strips of tape fasten the Nose Cone (at multiple points around its circumference) to the Body Tube. Keep checking to make sure the Nose Cone sits "true" and straight on the Body Tube as you do this. Make adjustments as necessary.
3) When reasonably secure wrap the fastening pieces of tape around the Body Tube just below the Nose Cone to keep them from coming undone while you handle the rocket assembly for the next steps.
Step 6: Blunt the Nose Cone.
To do so:
1) About 1/2" - 3/4" down from the tip, insert the modeling knife blade and push all the way to the work surrface, and pull the blade to the tip. Do this many times around the circumference to fray the tip.
2) Bend the frayed pieces outwards.
3) Place the tip on the work surface with the frayed strips pointing outwards (it will look like a star).
4) Trim the frayed strips off with the modeling knife by cutting around the circumference of the tip.
5) Place strips of tape over the tip, and down the sides of the Nose Cone in a similar fashion to the method used for installing the Pressure Cap.
6) Spiral wrap the Nose Cone with tape, from tip to base. This will produce a tape flange that will require some careful shaping, wrapping, and burnishing to prevent loose edges from affecting the flight characteristics.
Step 7: Assemble the Stabilizer Fins.
2) Laminate Stabilizer Fins with tape on one side, separate each discreet fin, fold and crease on the dashed lines.
3) Trim fin tips at 45 degree angle and encapsulate with a strip of tape at each end, Trim excess tape off.
4) Fold out the fastening flanges on the Stabilizer Fins.
Note: Assemble at least 3 Stabilizer Fins, 4 is optional.
Step 8: Install the Stabilizer Fins.
2) Transfer the marks corresponding to the number of Stabilizer Fins you have selected.
3) Remove the Alignment Guide and fasten the Stabilizer Fins to the Body Tube at the marked locations with vertical strips of tape along the length of the fins.
4) Wrap the ends of the vertical tape strips to secure them and prevent the Stabilizer Fins from coming off and ruining the flight characteristics mid-flight.
5) Burnish all tape for good measure.
You now have one fine paper and tape rocket! Make a bunch of 'em. Gather your launcher, the kids, some seed spectators and head out to a nice open field for some rocketry fun. Don't worry too much about having seed spectators. As soon as people see what it is you are doing they will be gathering to watch the spectacle.
This paper rocket design is strong and inexpensive. I've had them survive upwards of 15 launches with only minor damage (mostly crumpled nose cones). Eventually the body tube starts to fail and will bend in half. How long this takes depends upon the amount of moisture and humidity in the air.
Keep in mind that this design utilizes ballistic recovery (i.e. no parachute). The rocket just falls (or flies) into the ground, and while they are paper, they are not necessarily harmless. I've seen them stick into the soft soil of a soccer field like a yard dart. Exercise good judgement and make sure the area is clear before you launch.