Reading distorted words is one thing, but also asking legit users to enter things like this can get quite annoying. So it's important you don't burden the user with anti-spam measures.
Damien Katz has used a negative captcha to stop spam bots. This technique, also called honeypot field, is easy to implement and doesn't require the user to do anything.
A more complex honeypot implementation is described by Ned Batchelder. It involves randomized field names and hashed values to make sure bots haven't tampered with the form.
In his article he states the following:
Spammers don't make software that can post to any form, they make software that can post to many forms.
So it only takes a simple trick to confuse the majority of spam bots. A little bit more magic will take care of the remaining bots.
Regarding the Sesame Street solution, asking simple question or selecting the correct animal from a list: these are questions that are hard for spam bots to answer, but they can be difficult for users as well. Especially if your site has an international audience, people with a first language other than English may have trouble understanding the questions. It may not be an issue with your student audience, but it is something to keep in mind.
