I used to have an Epson printer with tray for DVD/CD printing and I have to say I had no issues with the quality of the printing. As usual, imo, it's going to come down to the quality of the disks and the quality of the image being printed.
Obviously don't "cheap out" on disks, buy decent brand ones (like Verbatim) and you should be able to print photo quality on them. Going by what you are saying you should be able to get them at a reasonable price as you will be buying 100+ (remember to allow for wastage!!) so you'll be left with the cost of the printer and ink. I reckon there will be no issue with the school making a profit, including the costs of DVD cases and the printing of the "sleeve", but you also have to remember the time you will take to print everything.
This printer should do the trick for you (around £130)
Epson Stylus Photo PX650 - Inkjet. Technical Specifications and Overview
It may be that a local print shop could do you a deal as well, it's worth checking out.