I don't think it's an incredibly morbid, horrible idea...
Little kids probably don't understand the situation at all, they're not getting a doll thinking that it's supposed to represent a slain peer, they're just getting a new doll to play with. But parents (or other loved ones) are buying that doll for these kids because they're thinking about how they'd never want that to happen to their child. It doesn't seem like a bad way to help an organization. I don't think it matters that only $3 per doll is being donated, it's going to add up. Part of that other $27 must go to the production of the toys, and let's be honest, no major company does anything if there isn't some profit involved. It's not the most pure course of action, but that doesn't mean that the world won't benefit from it.